MNCS Fixed Income Report December 5, 2023
Global Market Updates
• Wall Street equities rallied Monday (Dec 4, 2023), DJI closed down -0.11%, S&P 500 fell -0.54%, and Nasdaq slipped -0.99%.
• Stocks on Monday experienced a modest decline, due to a jump in bond yields which had a negative impact on technology stocks and exerted downward pressure on the overall market. The markets are awaiting reports this week on JOLTS job openings, ADP National Employment, and monthly US payrolls to gauge the strength of the US labor market to see if additional monetary tightening is appropriate.
• US Treasury 10-yr yields climbed +6.0 bps to 4.28%, followed by shorter-termed UST 2-yr yield that rose +8.0 bps to 4.64%.
• 10-yr yields closed higher on Monday, bond yields surged due to concerns that the markets optimism regarding the Fed’s potential interest rate cuts by the second quarter of 2024 might have been excessive.
• U.S. Oct factory orders fell -3.6% m/m, weaker than expectations of -3.0% m/m and marking the most substantial drop in 3-1/2 years.
• Global bond yields Monday moved lower; the German bund 10-yr yield fell -8.5 bps to 2.36%, the UK gilt 10-yr yield slipped -3.6 bps to 4.14%. The Japanese GB 10-yr yield closed down +2.50 bps to 0.70%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed higher Monday (Dec 4, 2023), as the 10-yr benchmark yield closed down -0.65 bps to 6.59%.
• IDR strengthened against the USD (USD/IDR fell -0.19% to 15,455) Monday. IDR supported by the influx of foreign funds into the local financial markets, especially in Government securities, shares, and Bank Indonesia Rupiah securities (SRBI).
• The government will also hold SBSN auction today with a total indicative target at IDR9tn. PBS38 and SPN-S 04062024 will be featured as a new issuance.
• In Monday’s Indo GB series trading, FR56 and FR97 emerged as key figures in leading the bond market, boasting trading volumes of IDR2.03tn and IDR2.82tn, respectively. Furthermore, the most actively traded were FR97 and PBS36.
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10-yr Indo GB yield to move within the range of 6.50-6.70% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
Dislaimer On
