28 November 2023
Fixed Income Report November 28, 2023
Global Market Updates
• Wall Street equities slightly declined Monday (Nov 27, 2023), DJI dropped -0.16%, S&P 500 closed down -0.02%, and Nasdaq closed down -0.13%.
• Stocks on Monday closed lower as the broader market faced downward pressure due to worries on China's economic slowdown might impact the global economic outlook, following a three-month low in the growth of China's industrial profits in October.
• US Treasury 10-yr yields slipped 7.8 bps to 4.39%, followed by shorter-termed UST 2-yr yield that fell 8 bps to 4.82%.
• Yields pushed lower on weaker-than-expected U.S. economic news, US Oct-23 new home sales fell -5.6% m/m to 679,000.
• On the other hand, demand during the 2-yr and 5-yr UST auction was lackluster. The USD54bn 2-yr UST note auction achieved only a bid-to-cover of 2.54, below the 10-auction average of 2.75, followed by the USD55bn 5-yr UST’s weak 2.46 bid-to-cover vs its 10-auction average of 2.53.
• From the Asian market; China Oct-23 industrial profits rose +2.7% YoY, the smallest increase in 3 months. Japan recorded a +2.3% YoY rise in Oct-23 PPI services, exceeding the expected +2.1% YoY.
• Global bond yields Monday moved lower ; the German bund 10-yr yield fell -9.5 bps to 2.55%, the UK gilt 10-yr yield dropped -7.1 bps to 4.21%. The Japanese GB 10-yr yield rose by +0.10 bps to 0.78%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed lower Monday (Nov 27, 2023), as the 10-yr benchmark yield edged up 6.8 bps to 6.71%.
• IDR appreciated against the USD (USD/IDR fell-0.45% to 15,495) Monday. IDR and other currencies in the region strengthened due to a renewed weakening of the USD, prompted by reduced expectations regarding the Fed's interest rate hike.
• In Monday’s Indo GB series trading, FR89, and PBS003 took lead in the bond market, boasting trading volumes of IDR 500bn and IDR 400bn respectively. Additionally, FR81 and FR89 emerged as the most actively traded.
• SBN-backed asset, SRBI, glimmered, received IDR10.0tn in awarded bids during its Friday auction. This marked an increase from the previous week's IDR8.5tn, showcasing a broader spectrum of bidding rates.
• The run up to the 2024 elections is set to commence today, marking the beginning of a 75-day campaign period that will run until Feb 10, 2024. We see that market’s movements during the period will be quieter than normal trading days.
Market Forecast
• Given the recent developments that unfolded within the global and domestic markets, we expect the 10-yr Indo GB yield to move within the range of 6.55-6.70% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
Disclaimer On
FR40
FR81
FR96
FR100
