Global Market Update
• The benchmark 10-year UST note yield increased 13 bps 4.14% on Wednesday (10/19/22).
• A the same time, the benchmark for short term rate of 2-year maturity rose 12 bps to 4.55%.
• Yield curve inversion narrowed and the spread of 2/10 year benchmark stood at -41 bps (vs -50 bps last week).
• UK reported an increase in inflation up to 10.1% YoY in Sep-22 (vs 9.9% YoY in Aug-22).
• Given that the inflation rise surpassed expectations further reinforces the possibility that BOE will tighten their monetary policy.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) 7.43% on Wednesday (10/19/22).
• Indonesia’s CDS was relatively flat but domestic currency IDR still depreciating against USD.
• Indonesia’s 5-year CDS stood at 153.22 bps yesterday (vs 152.81 bps on previous day).
• The IDR weakened against USD and was closed at IDR15,498/USD on Monday (vs IDR15,488/USD last day).
• BI estimated an increase in credit growth of 11% YoY by the end of 2022.
• BI also revised its projection of inflation rate by the end of 2022 from 6.7%
YoY to a more optimistic 6.3% YoY.
• Based on the recent Board of Governors meeting, there is strong likelihood that BI will raise the BI7DRR on Thursday (10/20/22) up to 50 bps.
Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 7.30-7.50% for today.
• Attractive Indo GB series to be traded today : FR0070, FR0077, FR0081, FR0095, FR0052, FR0073, FR0054, FR0091, FR0096.
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