Global Market Update
• Yield on the benchmark of 10-year UST note decreased 19 bps last week and closed at 3.49% on Friday (12/02/22).
• Yield on the short term bond (UST 2-year) also dropped 18 bps to 4.27% bringing 2/10-year spread at -78 bps.
• The decline in government bond yield trigger equity rally. On a weekly basis DJI rose 1.71%; S&P 500 increased 2.72% and Nasdaq Composite was up 3.73%.
• Despite ongoing hot labor market, UST note yield fell as market participants start to digest Fed’s plan to slower the pace of rate hike in Dec- 22.
• US non-farm payrolls increased 263,000 beating consensus estimate of 200,000, whilst unemployment rate stayed at 3.7% in Nov-22
• In addition, average hourly earnings for all US employee still increased 0.6% MoM beating consensus estimate of 0.3%.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) was relatively flat at 6.84% on Friday (12/02/22).
• Yield continued to drop following the downtrend in UST note yield downtrend movement recently.
• Improving risk perception and the drop of 10-year UST note yield supported domestic GB market.
• Indonesia’s 5-year CDS is now consistently below 100 bps, while IDR strengthened to 15,426/USD last week.
• Based on transaction data from November 28 to December 1, 2022, non- residents on the domestic financial market bought IDR9.64 trillion net, consisting of net buy of IDR8.76 trillion on the SBN market and net buy of IDR0.88 trillion on the stock market.
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 6.80-7.00% for today.
• Attractive Indo GB series to be traded today : FR0084, FR0037, FR0047, FR0073, FR0091, FR0096.
Disclaimer On
