Global Market Update
• Although Powell comment on rate hike has been anticipated, UST yields jumped 3-25 bps along the curve last week.
• The shorter maturity yields jumped higher than the belly and long end. Yield on 5-year UST hit above 3% before retreating to 2.94% on Friday (04/22/22).
• Meanwhile 10-year UST yield recorded a flattish move and hovering around 2.90% in the last trading day of previous week, it recorded an increase of 7 bps on a weekly basis.
• Powell said that taming inflation is absolutely essential and the Fed is now open up to possibility of 50 bps FFR hike in May-22.
• US equity market saw a massive decline on Powell’s comment. All 3 indexes suffered loss more than 2%.
• Dow Jones industrial lead the loss with 2.82% correction followed by S&P 500 that declined 2.77% and Nasdaq Composite that fell 2.55%.
Domestic Market Update
• Yield on 10-year Indo rose 2 bps to 6.97% on Friday (04/22/22).
• Along with the increase in government bond yield, IDR weakened against USD to IDR 14.357/USD last week (vs IDR14,343/USD in the previous day).
• Risk premium which is reflected by the 5-year Indo CDS increased to 104.65 bps from 100.24 bps previously.
• From Jan 3 – Apr 22, foreign investors booked a net sell of IDR43.47tn in government fixed income securities followed by yield spike.
• However, despite the recent upside pressure on government bond yield, spread between 10-year Indo GB and 10-year UST yield narrowed to 407 bps (vs 473 bps in earlier this year).
Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to keep steady within a range of 6.90-7.00% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0086, FR0090, FR0078, FR0052, FR0087, FR0091.
Disclaimer On
