Global Market Update
• The benchmark 10-year note yield declined 8 bps to 3.27% on Wednesday (09/07/22).
• On the other hand, the 2-year benchmark yield also dropped 8 bps to 3.43% at the same time.
• Spread between 2/10-year UST note yield was at -16 bps indicating a yield curve inversion. However yield curve inversion slightly narrowed.
• US stock indices increased significantly. The DJI rose 1.40%; S&P 500 was up 1.83% whilst Nasdaq Composite jumped 2.14% on Wednesday.
• Elsewhere in Europe, market participants await for ECB interest rate decision this week.
• Following the probability of 75 bps rate hikes, government bond yield increased steeply.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) rose by 4 bps to 7.19% on Wednesday (09/07/22).
• The IDR weakened against USD and was closed at IDR14,918/USD on Wednesday (vs IDR14,887/USD on Tuesday).
• Indonesia’s 5-year CDS declined to below 120 bps and was at 118.37 bps yesterday.
• Bank Indonesia (BI) recorded that Indonesia's foreign exchange reserves were stable at USD132.2 billion in August 2022.
• Factors affecting the position of foreign exchange reserves: 1) tax and service revenues; 2) oil and gas foreign exchange earnings & 3) the need for IDR stabilization.
• The foreign exchange reserve position is equivalent to financing 6.1 months of imports or 6.0 months of imports and servicing of government foreign debt.
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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