Global Market Update
• Yields on benchmark UST note edged lower after US inflation data release that came in-line with the broad market expectation.
• US annual inflation rate rose 6.5% YoY in Dec-22, lower than previous month of 7.1% YoY, yet came as expected.
• On the other hand, US core inflation showed an increase of 5.7% YoY and again this was also in-line with consensus estimate.
• The benchmark 10-year UST note yield decreased 10 bps to 3.44%, whereas the short term rate (2-year UST note) fell 9 bps to 4.13%.
• US stock market continued to climb starting. The DJI and Nasdaq Composite was up by 0.64%. Meanwhile the S&P 500 rose 0.34%.
Domestic Market Update
• Yield on the benchmark 10-year Indo GB (FR0096) continued to fall. Yield dropped 6 bps to 6.73% on Thursday (01/12/23).
• The decrease in Indo GB yields was also supported by IDR appreciation against USD and lower CDS.
• The IDR strengthened against USD and was closed at IDR15,339/USD yesterday (vs IDR 15,482/USD on Wednesday).
• On the other hand, the 5-year Indo CDS slightly declined to below 90 bps and stood at 89.66 bps.
• US continued disinflation may provide the environment for lower yield as we believe the end of aggressive rate hike cycle is near.
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 6.70-6.80% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0044, FR0085 and FR0096.
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