08 September 2023
Fixed Income Report September 8, 2023
Global Market Updates
•Wall Street equities dragged downwards Thursday (Sep 7, 2023), amid hawkish concerns combined with a faltering technology sector; Nasdaq slipped 0.89%, S&P weakened 0.32%, whilst DJI gained a notch by 0.17%.
•Apple weighed down on Nasdaq, closing 2% lower yesterday upon negative sentiments burgeoning from the planned restriction of iPhone use by China’s government-backed agencies and satte companies, according to Wall Street Journal.
•Another side of the coin came in the form of another hawkish-spurring news that US weekly unemployment claims fell to 216k from the previous week’s 229k, beating consensus of 234k, coupled by 2nd quarter unit labor costs that rose stronger than expectations of 1.9% QoQ to 2.2% QoQ.
•The 10-yr UST notes yield retreated c. 3 bps to 4.27%. The 2-yr UST notes yield slipped c. 7 bps and closed at 4.94% upon some dovish Fed comments, flattening the inversed 2s10s yield spread to -64 bps.
Domestic Market Updates
•Indonesian benchmark series of LCY government bonds mostly closed lower Thursday (Sep 7, 2023). The 10-yr benchmark series yield hiked another 5 bps to 6.57%.
•The 2s10s Indo GB spread now stands at 36 bps, leaping by c. 15 bps from the start of the week.
•Domestic bond yields, in our view, could stay higher for longer amid unexpected tight labor data readings from the US despite BI remaining adamant on their decision not to raise their 7DRR any further.
•IDR mainly weakened against global major currencies, depreciating against the USD (USD/IDR further increased by 0.24%) amid DXY’s strengthening.
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 6.50-6.60% for today.
•Attractive Indo GB series to be traded today : FR0081, FR0082, FR0087, FR0096, FR0100.
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