Global Market Updates
• Major US equity indexes slumped Wednesday (Sep 20, 2023) as bond yields surged to 16-year highs after the FOMC's rate hold verdict still leaves room for another rate hike this year.
• US Treasury notes slipped further Wednesday, with the 10-yr UST yield jumping by c. 5 bps to 4.37%, while the shorter 2-yr yields gained another c. 3 bps to 5.08%.
• Global bonds were mixed: 10-yr German bund yield fell 3.6 bps to 2.70%, 10-yr UK gilt yield fell 12.5 bps to 4.22% and the 10-yr JGB yield slipped/rose 1.2 bps to 0.74%.
• The FOMC’s 2023 GDP projection for US was raised to 2.1% from 1%, the unemployment rate forecast lowered to 3.8% from 4.1%, and the core PCE deflator moderated to 3.7% from 3.9%.
• Based on updated quarterly projections released by the US central bank, the Fed may still lift their rates once more to a peak of 5.50%-5.75% (a 54% probability of a 25 bps hike in Dec-23’s FOMC), and be kept tighter through 2024 than previously expected.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds saw a halt to its sell-off Wednesday (Sep 20, 2023). The 10-yr benchmark series yield edged down 1 bps to 6.73%. The 2s10s Indo GB spread stood flat at 51 bps.
• Bank of Indonesia’s board of governors meeting is to be held today with markets expecting a rate hold at 5.75%.
• As of Sep 19, 2023 Indonesian gov’t securities still saw outflows from non residents (IDR437bn), and domestic banks (IDR4.9tn), accompanied by monetary operations from BI (net buy of IDR3.77tn), as well as net inflows from mutual funds (IDR878bn), insurance and pension funds (IDR459bn).
• IDR mostly weakened against global major currencies, further depreciating slightly against the USD (USD/IDR rose +0.03%) on USD’s newly founded momentum after a hawkish hold from the FOMC.
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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