30 November 2023
Fixed Income Report November 30, 2023
Global Market Updates
• Wall Street equities showed slight gains Wednesday (Nov 29, 2023), DJI closed up +0.04%, S&P 500 slipped -0.09%, and Nasdaq closed down -0.14%.
• Stocks on Wednesday initially moved higher before closing mixed, following the revision of the US Q3 GDP higher, and the Q3 core deflator was revised downward, adding credence the US economy is growing at moderate pace with less pressure on prices enabling the Fed to halt its rate-hike program.
• US Treasury 10-yr yields dropped -4.8 bps to 4.27%, followed by shorter-termed UST 2-yr yield that fell -9 bps to 4.64%.
• 10-yr yields dropped to its lowest point in 2-1/2 months. The downward trend in yields continues, indicating expectations that the Fed will hold interest rates steady.
• US Q3 GDP was revised upward by +0.3 to +5.2% exceeding the forecast of +5.20%. US GDP price index was revised upward by +0.1 to 3.6%, stronger than expectations of no change at 3.5%, while the Q3 core PCE deflator was revised downward by -0.1 to 2.3%, weaker than expectations of no change 2.4%.
• Global bond yields Wednesday moved lower; the German bund 10-yr yield fell -6.5 bps to 2.43%, the UK gilt 10-yr yield down -7.7 bps to 4.09%. The Japanese GB 10-yr yield slipped by -8.60 bps to 0.67%.
Domestic Market Updates
• Indonesian benchmark series of LCY government bonds closed higher Wednesday (Nov 29, 2023), as the 10-yr benchmark yield closed down -3.21 bps to 6.67%.
• IDR closed stronger against the USD (USD/IDR fell -0.40% to 15,395) Wednesday. IDR gained strength against the USD due to a cautious stance ahead of the Bank Indonesia Annual Meeting (PTBI) results tonight, coupled with sustained interest from foreign investors in the domestic financial market.
• In Wednesday’s Indo GB series trading, FR98 and FR101 emerged as frontrunners within the bond market, boasting trading volumes of IDR2.37tn and IDR2.469tn, respectively. Furthermore, the most actively traded were FR91 and FR97.
• The yield spread between 10-year bonds in Indonesia and the US exceeds 200 basis points. Indonesia's robust economy and the comparatively low valuation of investment assets have enticed foreign investors to enter the Indonesian market.
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 6.50-6.70% for today.
• Attractive Indo GB series to be traded today : FR0040, FR0081, FR0096, FR0100.
Disclaimer On
FR40
FR81
FR96
FR100
