Global Market Updates
• Hawkish tones have resumed to drive US yields higher, especially post-BOE’s verdict on raising its benchmark interest rates by 50 bps to 5.00%.
• Yields for the long-term 10-year benchmark shot up 8 bps to 3.80% while the 2-year benchmark surged by 9 bps to 4.77%, leaving the US yield curve spread to hover around -97 bps.
• Based on CME FedWatch, the consensus has seen a gain in the probability for further a rate hike on July’s FOMC meeting at a 75.6% (vs yesterday 71.9%).
• US Treasury Secretary stated an optimistic note regarding the diminished risk of the US falling into a recession, saying that slowing consumer spending is to be expected in the campaign against inflation.
• US equity indices, on the other hand, managed to close mixed, with S&P 500 breaking its 3-day slump and edged +0.37%, followed by Nasdaq’s +0.95% gain, while DJI closed flat.
• Japan saw a higher-than-expected growth in consumer prices in May-2023, which sends speculations on the probability of higher inflation forecasts from the central bank and possibly modify their stimulus and even yield curve control programs.
Domestic Market Updates
• The benchmark series of LCY government bond prices unanimously appreciated on Thursday (Jun 22, 2023) in tandem with regional bond yields. Indonesia’s benchmark 10-year LCY government bond yield FR0096 slid 2 bps to 6.27%, and other benchmark series followed suit.
• Alongside the decline of domestic LCY government bond yields, IDR was closed mixed against other major currencies but saw a gain against USD, with the USD/IDR having edged down -0.03% yesterday.
• In alignment with the market’s expectations, Bank of Indonesia’s (BI) Board of Governors Meeting passed the verdict to maintain the current BI-7DRR at 5.75%.
• This was on the back of stable and overall in-line development of the banking prime lending rate (SBDK) in response to the BI-7DRR across the majority of banks in Indonesia.
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.
MNCS Research
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