Global Market Update
• The benchmark 10-year note yield rose 5 bps to 3.32% on Thursday (09/08/22). • On the other hand, the 2-year benchmark yield also increased 8 bps to 3.51% at the same time.
• Spread between 2/10-year UST note yield was at -19 bps, widening from previous position at -16 bps indicating a yield curve inversion.
• US stock indices were volatile before ended higher. The DJI rose 0.61%; S&P 500 was up 0.66%; whilst Nasdaq Composite increased 0.60%.
• ECB decided to raise its benchmark policy rate with the magnitude of 75 bps, in-line with market expectation.
• Furthermore, ECB also set the hawkish tone and will do rate hikes in the upcoming meeting as policy makers see inflation could hit >10% in the near future.
• After increasing the benchmark rates, EUR strengthened against USD and traded above 1/USD again.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) declined by 3 bps to 7.16% on Thursday (09/08/22).
• The decline in the benchmark government bond yield was in-line with IDR appreciation and lower CDS.
• The IDR strengthened slightly against USD and was closed at IDR14,901/USD on Thursday (vs IDR14,918/USD on Wednesday).
• Indonesia’s 5-year CDS declined to below 120 bps and was at 113.60 bps yesterday (vs 118.37 bps on the previous day).
• On the data front, Bank Indonesia (BI) noted that consumer optimism for the economy increased as reflected in the Consumer Confidence Index (CCI) which increased 1.5 points MoM to 124.7 in August-22.
• The increase in consumer optimism in August 2022 was driven by increased consumer confidence in current economic conditions and expectations for the future economy.
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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