Global Market Updates
• The air has been cleared regarding the Fed’s next awaited decree, with last night’s adamant statements from officials on tackling inflation rate as their priority having cemented a hawkish picture amongst investors.
• This is well reflected from market participant’s 78.1% probability consensus on another impending rate hike of 25 bps as soon as the Jul-23 FOMC meeting, leaping from previous day’s 74.4%.
• This anticipation further slowed Wall Street indices ahead of Powell’s official statement, couped with FedEx’s down-revised outlook on the back of lackluster demand.
• Yield on the short-term US Treasury for 2-year benchmark slipped another 2 bps, whereas the long- term 10-year benchmark dropped even further by 3 bps to 3.74%.
• Last week’s PBoC reverse repo rate cuts have already brought down the average mortgage rate to a record low of 4.14%.
• This paints a brighter outlook for this country’s economy starting from 2H23 on the back of accommodative policy stimulus and consumption recovery as portrayed by increased oil demand.
• With aims to conserve adequate interbank liquidity, the PBoC has also injected RMB180 billion through their open market operation, and we can expect for more stimulus along the way.
Domestic Market Updates
• The benchmark series of LCY government bond prices fell on Tuesday (Jun 20, 2023). Indonesia’s benchmark 10-year LCY government bond yield FR0096 rose 1 bps to 6.32% and followed by other benchmark series for short and long term bond.
• Domestic LCY government bond yield decline was also accompanied by IDR depreciation against major currencies particularly USD by which the local currency weakened and hitting 15,000/USD yesterday.
• SBSN auction resulted an incoming bids of IDR41.4tn pointing lower appetite than in previous auction of IDR60.0tn and total awarded bid of IDR7tn.
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 6.25-6.45% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0084, FR0096.
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