Global Market Updates
• Wall Street was closed commemorating Juneteenth starting this week. Markets will wait for the testimony of The Fed officials, to provide monetary policy guidance amid an optimistic decline in the inflation rate.
• Apart from that, the housing market will also be the focus of investors which can indicate the state of the economy.
• Room for further rate hike to remain open. Market participants bet for 74.4% probability of another 25 bps hike in Jul-23 FOMC meeting, the probability has risen from previous day.
• The action may be delivered by US central bank after pausing a rate hike in Jun-23 meeting.
• In contrast to US, Chinese central bank (PBoC) has once again ease its monetary policy by cutting its 1-year and 5-year Loan Prime Rate (LPR) by 10 bps.
• The magnitude of PBoC’s rate cut was in-line with broad market expectation and its previous easing for the reverse repo rate last week.
• China’s weakening economic outlook with low inflation and high inventory level may be disinflationary and has dragged down commodity prices so far.
Domestic Market Updates
• The benchmark series of LCY government bond prices fell on Monday (Jun 19, 2023).
• All the benchmark series of LCY government bond yield rose with the 10-year benchmark (FR0096) yield increased 3 bps and closed at 6.31% yesterday.
• During the trading day, the IDR has hit 15,000/USD level before closing at 14,995/USD. Furthermore, the IDR also depreciating against other major currencies.
• The weakening of domestic LCY government bond prices was justified as yield has declined over the past week.
• In addition, Bank Indonesia (BI) will decide its monetary policy this week. Consensus expect domestic central bank to hold the rate at current level.
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 : FR0077, FR0084, FR0064, FR0096.
MNCS Research
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