Global Market Update
• The 10-year U.S. treasury yield rose by 7 bps topping to 1.55% after hitting to 1.56% or the highest level since June last week.
• Overall, the benchmark government bonds yields increased by 1-5 bps along the curve.
• U.S. stock market rebounded last night after experiencing a sharp correction in the previous day.
• DJI rose by 0.92%. S&P 500 added 1.05% and tech heavy Nasdaq Composite jumped 1.25%.
• The Euro Zone and U.K. benchmark government bond yields also increased following the hikes in U.S. treasury notes rates.
• Both energy crisis & OPEC+ decision to gradually increase oil production have sent Brent Crude price higher topping more than USD82/bbl, the highest level in the last 3 years.
• Soaring oil and other energy prices has renewed fear of persistent and high inflationary pressure that could force central bank to raise the borrowing cost earlier than expected.
• Besides waiting for job data release that due this Friday, investors eye on the progress of U.S. debt ceilings which Lawmakers will vote to raise or suspend it on October 18.
• Another risk is coming from China’s Evergrande debt crisis that batters more Chinese property companies bonds sell off.
Domestic Market Update
• The 10-year Indo GB declined by 2 bps to 6.18% despite rising risk premium. However, the benchmark yield was still in our forecast range of 6.15%-6.25%.
• The 5-year Indo CDS increased by to a more than 85 bps yesterday. Rupiah continued to gain its strength to IDR 14.253/USD in the spot market.
• Government has successfully issued 6 series of Sovereign Sharia Securities (SBSN) and raising IDR5tn from yesterday's auction.
• The indicative target set for yesterday's auction was lower than in the previous auction on the back of positive trend in government revenues.
• As of Aug 31, total government revenue has reached IDR1,177.6tn or 13.9% higher than the same period last year.
• Furthermore, the total government securities issuance as of September 29 reached IDR1,053tn.
• Yields in primary market remained low align with yields in the secondary market. Investors appetite stayed high. Total incoming bids were at IDR46tn.
Market Projection
• We expect the 10 year Indo GB yield to increase and tend to move within range of 6.20% - 6.20% today.
• Attractive Indo GB series to be traded today : FR0086, FR0082, FR0087, FR0068, FR0080, FR0072.
Disclaimer
