Company Update

23 September 2022

Fixed Income Report September 23, 2022

Global Market Update
• The benchmark 10-year note yield jumped 19 bps to 3.72% on Thursday (09/22/22)
• On the other hand, the 2-year benchmark increased 7 bps to 4.11% at the same time, hitting its level high since Oct-07.
• Spread between 2/10-year UST note yield was at -39 bps or narrowing from the previous day position at -52 bps.
• US stock indices continued to fall on Thursday. The DCI fell 0.35%; S&P 500 lost 0.84% whilst Nasdaq Composite dropped 1.37%.
• Financial market moved responding to Fed’s rate hikes by 75 bps on Sep-22 meeting.
• Germany & UK benchmark government bond also increased significantly yesterday.
• The benchmark 10-year UK government bond yield was near 3.5% yesterday while Germany’s benchmark government bond was near 2%.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) increased 4 bps at 7.22% on Thursday (09/22/22).
• The increase in Indo GB yield was in-line with IDR depreciation hitting 15,000/USD and rising risk premium.
• Indonesia’s 5-year CDS rose to above 135 bps yesterday and was closed at 136.93 bps.
• Furthermore, IDR continued to depreciate against USD. The IDR was closed at IDR15,023/USD on Thursday (vs IDR14,997/USD on Wednesday).
• BI decided to raise benchmark policy rate by 50 bps to 4.25% on Sep-22 meeting, higher than consensus estimate projecting a +25 bps increase.
• Bank Indonesia (BI) estimates that headline and core inflation will rise to >6% & 4.6% by the end of the year due to the increase in subsidized fuel prices and the impact is expected to last for 3 months.
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, FR0077, FR0081, FR0086, FR0090, FR0064, FR0082, FR0087, FR0091, FR0096.
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