Global Market Updates
• Yields on the US government bonds were mixed despite Fed decided to hold interest rate unchanged in the latest FOMC meeting.
• The benchmark for short-term 2-year yield rose 2 bps to 4.69% and for the longer-term 10-year yield fell 3 bps to 3.79% yesterday.
• US stock indices were also traded mixed with the DJI fell 0.68%, the S&P 500 was flattish meanwhile NDX increased 0.39%.
• Fed’s decision to hold rate at 5.00-5.25% in Jun-23 FOMC meeting has been broadly expected. However, further rate hike is still possible given the dot plot showing that rate may go further to 5.60%.
• In addition, US PPI index also contracted 0.3% in May-23 from the previous month or deeper than consensus estimate of 0.1% contraction.
• After Fed, now market will also focus on ECB by which the European monetary authority is expected to raise another 25 bps.
Domestic Market Updates
• The benchmark series of LCY government bond prices continued to strengthen on Wednesday (Jun 14, 2023).
• Indonesia’s benchmark 10-year LCY government bond yield FR0096 fell 2 bps to 6.24% and followed by other benchmark series for short and long term bond.
• The IDR depreciated against USD and hitting 14,900/USD level again but the 5-year CDS is now approaching 80 bps level.
• Consensus expect another trade surplus of USD3.02bn in May-23 driven by exports and imports contraction.
• Such expectation mainly come from imports deeper contraction than exports. Imports is projected to fall 11% YoY whereas exports to drop 8.7% YoY.
Market Forecast
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.20-6.40% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0084, FR0096.
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