Global Market Update
• The benchmark 10-year UST note yield rose 6 bps to 3.26% on Thursday (09/01/22).
• Meanwhile the benchmark 2-year UST note yield steady at 3.50% at the same time.
• The spread between 2/10-year UST note yield slightly narrowed to -24 bps from previously -31 bps.
• US stock indices closed mixed on Thursday. DJI and S&P 500 was up 0.46% and 0.30%, whilst Nasdaq Composite fell 0.26%.
• US job market data continued to show an improvement. US initial jobless claims declined by 5,000 to 232,000 for the week ended on Aug 27, 2022.
• In addition, US ISM manufacturing PMI also still showing an expansion at 52,8 in Aug-22, or 0.8 point higher than consensus estimate.
• Looking at those data, Fed may continue to tighten their monetary policy in order to bring down inflation.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose marginally by 1 bps to 7.11% on Thursday (09/01/22).
• The IDR weakened against USD and was closed at IDR14,883/USD on Thursday (vs IDR18,483/USD on Wednesday).
• Indonesia’s 5-year CDS rose to 123.82 bps on Thursday (vs 110.66 bps on Wednesday).
• Bank Indonesia (BI) has officially raised the statutory reserve requirement ratio for banks to 9% and it is estimated to absorb IDR219tn banking liquidity.
• The increase in Statutory Reserves is part of the normalization policy implemented by BI to absorb excess liquidity in the banking system.
• Going forward, we view that BI will focus on stabilizing the exchange rate and inflation through intervention policies and an increase in the benchmark interest rate amidst the threat of rising inflation.
Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 7.10-7.30% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0042, FR0047, FR0052, FR0085, FR0091 and FR0096.
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