Global Market Update
• Yields on the benchmark UST note increased along the curve on Friday (02/10/23).
• The benchmark 10-year and 2-year yields rose 7 bps and 4 bps to 3.73%, and 4.52% at the same time.
• US stock indices recorded a mix performance. The DJI and S&P 500 rose 0.50% and 0.22% respectively, whereas Nasdaq Composite fell 0.61%.
• US technology stocks has begun a decline last week booking a negative weekly performance of 2.41% in response to the possibility of higher peak rate.
• Some of market participants now expect that Fed would raise the interest rate to peak at 6% by Sep-22.
• This concern has been reaffirmed by Fed Governor Christopher Waller who said interest rates could rise by more than investors are expecting.
• Furthermore Christopher Waller also emphasized that Fed’s battle against inflation was far from over.
• Following to the Fed’s official statement and market speculation, global government bond yields have risen lately.
Domestic Market Update
• Yield on the benchmark 10-year (FR0096) increased 5 bps to 6.65% on Friday (02/10/23).
• The benchmark government bond yield increased following IDR depreciation, weakening risk perception as well as rising government bond yield globally.
• The IDR weakened against USD and closed at IDR15,134/USD last week vs IDR15,097/USD on the previous day.
• Indonesia’s 5-year CDS is approaching to 90 bps and closed at 89.95 bps last week.
• Bank Indonesia reported a foreign outflows of IDR0.59tn from domestic financial market.
• Foreign investors net sold SBN IDR3.11tn and net bought equity IDR2.52tn during 6-9 February 2023.
• The net selling in the SBN market also trigger government bond yield to increase. The benchmark 10-year SUN has increased ~10 bps from a week ago.
• However, based on portfolio inflows throughout 2023, foreign investors still booked a sizeable SBN amounting at IDR49.57tn through 9 February 2023.
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 6.71-7.00% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0046, FR0070, FR0077, FR0081, FR0052, FR0096, FR0067.
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