Global Market Update
• US government bond yields experienced a sharp decline in the beginning of Mar- 22. UST yield fell 6-15 bps along the curve.
• The benchmark 10-year UST yield dropped nearly 10 bps to 1.76% on Tuesday (03/01/22).
• Majority of benchmark sovereign bond yield also fell with Germany 10-year yield flipped out to negative territory again.
• Demand for save haven asset surged pushing government bond price to rise as Russia’s invasion to Ukraine entered the 6 th day.
• Russia is reported to attack Kharkiv with missile. Furthermore, Russian forces continue to target Ukraine capital Kyiv.
• The Kremlin’s military vehicles are seen to have a large convoy of 65 km long advancing toward Kyiv.
• Even though Russia-Ukraine 1st talk has concluded and next phase of negotiation could begin any time soon, markets are anticipating the worst.
• Oil price jumped to the highest level in the last 7-years with Brent future hitting US$107.77/bbl.
• Meanwhile riskier asset such as equity tumbled. US stock market fell sharply in early Mar-22. All the 3 indices were dipped in red with more than 1.5% correction.
Domestic Market Update
• The benchmark 10-year Indo GB yield was stable at 6.50% on Tuesday (03/01/22).
• The IDR value strengthened against USD to the level of IDR14,335/USD to start this week (vs IDR14,367/USD last week).
• Risk premium also fell. The 5-year Indo CDS declined nearly 3 bps to 113.64 bps yesterday.
• The Indonesian government has succeeded in issuing SBN worth IDR19 trillion in yesterday's auction, lower than the indicative target of IDR23 trillion.
• In addition, the value of incoming bids was recorded at IDR61.52 trillion, lower than the previous auction of IDR76.77 trillion.
• The amount won was lower than the indicative target in line with the better outlook for the budget deficit and lower financing needs for this year.
• We believe that investors stance remained wait and see amid the heating up of geopolitical tensions between Russia and Ukraine.
• On the data front Statistics Indonesia reported CPI for Feb-22 rose 2.06% YoY slightly in line with our forecast of 2.04% YoY.
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 6.45-6.55% for today.
• Attractive Indo GB series to be traded today: FR0090, FR0071, FR0078, FR0052, FR0054 and FR0091.
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