Company Update

29 September 2022

Fixed Income Report September 29, 2022

Global Market Update
• The benchmark 10-year note yield finally dropped after topping 4%. The longer benchmark rate declined 22 bps to 3.73% on Wednesday (09/28/22).
• On the other hand, the 2-year benchmark weakened 15 bps to 4.13% at the same time.
• Spread between 2/10-year UST note yield was at -40 bps, widening from the previous day position at -33 bps.
• US government bond yield dropped following BoE decision to buy longer-dated UK’s government bond to stabilize GBP.
• Note that the GBP has plunged nearly 20% throughout this year and approaching to 1/USD.
• Yield on the UK’s 10-year benchmark government bond decreased 50 bps to 4.00%.
• Following the significant drop in the risk free rate, US stock market rebounded sharply yesterday.
• All the 3 major indices for US equity market jumped more than 1% (DJI +1.88%; S&P 500 +1.97% and Nasdaq Composite +2.05%).
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) increased 4 bps to 7.39% on Wednesday (09/28/22).
• Increasing the benchmark government bond yield recently was driven by : 1) rising risk premium & 2) IDR depreciation against USD.
• Indonesia’s 5-year CDS hit above 160 bps yesterday. The risk premium rose to 163.96 bps.
• The IDR continued to weaken against USD and was closed at IDR15,263/USD yesterday (vs IDR15,123/USD on Tuesday).
• IDR depreciation against USD was largely driven by : 1) Fed's projection to increase FFR to FY23F; 2) strengthening the DXY index & 3) outflows from domestic financial market.
• Foreign investors booked a net sell in the domestic equity market amounting to IDR2.51tn in the period 26-28 September 2022.
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 7.25-7.45% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0081, FR0090, FR0064, FR0095, FR0082, FR0087, FR0091, FR0096
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