Global Market Update
• Yields on benchmark UST note edged lower ahead of US inflation data release that is expected slowing.
• The benchmark 10-year UST note yield decreased 8 bps to 3.54%, whereas the short term rate (2-year UST note) fell 3 bps to 4.22%.
• US stock market continued to climb starting 2023. Nasdaq Composite rose 1.76% and already rebounding 5.24% since the start of the year.
• Disinflation expectation driven by sluggish aggregate demand may limit central bank to raise further the interest rate and thus market participant hope for ending the aggressive rate hike anytime soon.
• Gold price also jumped to 8-month high as hope to end rate hike cycle is spreading fast.
Domestic Market Update
• Yield on the benchmark 10-year Indo GB (FR0096) continued to fall. Yield dropped 4 bps to 6.79% on Wednesday (01/11/23).
• The decrease in Indo GB yields was also supported by IDR appreciation against USD and stable CDS.
• The IDR strengthened against USD and was closed at IDR15,482/USD yesterday (vs IDR 15,576/USD on Tuesday).
• On the other hand, the 5-year Indo CDS slightly declined to 92.85 bps, and consistently below 100 bps.
• Rising government bond price is not followed by equity market recently. JCI experienced de-rating with negative return of 3.89% YTD.
• We think this may reflect a rebalancing to safer and better yielding asset. Investors rebalancing particularly foreign is also confirmed by flows to government bond market amounting to IDR59.2tn since Nov-22.
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 6.75-6.85% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0044, FR0085 and FR0096.
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