Global Market Updates
• Wall Street indexes saw muted movements Monday (Sep 18, 2023), kept afloat by gains in US Treasuries while investors remain cautious ahead of the FOMC meeting.
• US Treasury notes strengthened Monday, with the 10-yr UST yield edging down c. 1 bps to 4.32%, while the shorter 2-yr yields gained another 3 bps to 5.05%.
• Investors’ hesitance came from US NAHB housing index that fell 5 points to 45, weaker than expectations of only a 1 point drop to 49, reflecting a diminishing confidence among homebuilders and we might see more decline in house building activities in the coming months from pinching mortgage rates.
• Global bonds also saw bearish movements after ECB nad BoE was faced with the likelihood of facing further tightening as the only means to avoid an undesirable stagflation. the 10-yr German bunds yield rose 3.3 bps to 2.71%, whereas the UK 10-yr gilts was sent up 3.4 bps to 3.39%.
• Bonds from the Asian markets saw similar trends, with the Chinese 10-yr gov’t bonds to resume its sell-off (yield went 0.6 bps higher), followed by Malaysia’s 10-yr and Thailand’s 10-yr gov’t bond yields that rose 1.4 bps and 3.8 bps, respectively.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds continued its sell-off Monday (Sep 18, 2023), as opposed to our expectation. The 10-yr benchmark series yield jumped another c. 3 bps to 6.70%. The 2s10s Indo GB spread remained flat at 46 bps.
• The government will auction SUN today with an indicative target of IDR14tn. We expect today’s auction will likely have a lower total incoming bids than previously. However, the total winning bids might have the potential to increase.
• Considering the results of the number of bids entered into the previous FR0100 auction on Sep 5, we see that FR0100 has the potential to be the most attractive bond for investors.
• IDR mostly strengthened against global major currencies, appreciating slightly against the USD on limited DXY bullish sentiments (USD/IDR down -0.01%).
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10 year Indo GB yield to move within the range of 6.65-6.75% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0082, FR0087, FR0096, FR0100.
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