Global Market Update
• The 10-year UST yield rose to 1.80% last night (02/01/22). Meanwhile the 2- year UST yield keep hovering around 1.17%.
• US stock market closed higher. DJI was up 0.76%, S&P 500 inched 0.68% higher and Nasdaq Composite gained 0.75%.
• Yields US government bond rose after ISM manufacturing PMI release for Jan22 that showed a growth and higher prices paid.
• The ISM Prices Index increased 7.9 percentage points to 76.1%. Rising prices may indicate that high inflation to persist.
• In addition, US JOLTs Job Opening data came higher than market estimate. US reported job openings of 10.925mn in Dec-21, higher than 10.775mn in the previous month and consensus forecast of 10.3mn.
• Rising prices and continuously improving job market may bolstered The Fed confidence to raise interest rate in Mar-22.
• Elsewhere, improving job market was also observed in EU. The unemployment rate in EU fell to 7% in Dec-21, below previous figure and consensus estimate of 7.1%.
Domestic Market Update
• Domestic financial market was closed yesterday, commemorating Chinese New Year.
• The 10-year Indo GB yield slightly declined 3 bps to 6.42% on Monday (01/31/22) in line with our daily forecast range of 6.35-6.45%.
• The IDR value slightly appreciated against USD and was closed at IDR 14,383/USD (vs IDR14,388/USD last week).
• Risk premium also decreased with Indonesia’s 5-year CDS stood at 90.41 bps (vs 90.88 bps last week).
Market Projection
• Statistics Indonesia is set to announce Jan-22 inflation rate today. BI expect inflation to reach 2.15% YoY, while we see inflation to increase 2.26% YoY on the back of rising food staple prices.
• Government is scheduled to conduct securities auction today with the indicative target of IDR25tn.
• We expect government successfully achieve funding target. However we foresee that demand may be lower than in previous auction with investors to shorten their duration amid potential of rising interest rate.
• Given the recent development, we expect the 10-year Indo GB yield to move within range of 6.35-6.45% today.
• Attractive Indo GB series to be traded today: FR0070, FR0084, FR0086, FR0082, FR0091.
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