Global Market Update
• US financial markets were closed on Monday (09/05/22) commemorating a Labor Day.
• European financial markets tumbled to start this week as Russian energy SOE Gazprom said it will halt gas flow to Europe via Nord Stream 1 pipeline indefinitely.
• This has reignited market concerns over energy supply that may fuel a jump in an already elevated and high inflation faced by European countries.
• Given the higher inflationary pressure going forward, market participants start to pricing a 90% probability of ECB will raise the benchmark policy rate by 75 bps on this Thursday.
• Risky asset such as stocks fell. The broad Stoxx600 index declined by 0.6%, whilst, GDAX dropped 2.2%.
• EUR/USD weakened 0.25% and consistently below 1/USD since the start of this month.
• On the other hand, some benchmark government bond yields also increased. Germany’s 10-year bond yield rose 4 bps while Italy’s 10-year benchmark bond yield climbed back nearing 4% level.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose marginally by 1 bps to 7.14% on Monday (09/05/22).
• The IDR weakened against USD and was closed at IDR14,903/USD on Monday (vs IDR18,897/USD on Friday last week).
• Indonesia’s 5-year CDS was still above 120 bps and closed at 123.22 bps on Monday.
• The government plans to conduct an auction of 6 series SBSN with an indicative target of IDR9.0tn on Tuesday (09/06/22).
• We think investors will tend to wait and see as UST yield rises and IDR weakens recently. We expect potentially lower incoming bids value from the previous auction this time.
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 : FR0070, FR0081, FR0086, FR0090, FR0064, FR0082, FR0087, FR0091, FR0096.
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