Global Market Update
• The benchmark 10-year note yield rose by 5 bps to 3.36% on Monday (09/12/22).
• On the other hand, the 2-year benchmark yield increased 1 bps to 3.57% at the same time.
• Spread between 2/10-year UST note yield was at -21 bps, narrowing from previous position at -24 bps indicating a yield curve inversion.
• US stock indices were closed higher to start this week. The DJI rose 0.71%; S&P 500 was up by 1.06%; whilst Nasdaq Composite jumped 1.27%.
• US stock indices extended gain from last week amidst rising yields on government bond.
• Wall Street strengthened on the back of market participants' expectations for the release of the potentially declining US inflation data in Aug-22, where consensus forecasted Aug-22 inflation of 8.1% YoY (vs 8.5% in Jul-22).
• Declining inflation is good at some point, however the pace is still far above Fed’s target at 2%, thus US CB would still continue to tighten.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) declined by 3 bps to 7.12% on Monday (09/12/22).
• Continued lowering risk premium CDS also helped the price of benchmark government bond to strengthen.
• Indonesia’s 5-year CDS declined to below 110 bps and was at 101.19 bps on Monday (vs 111.08 bps on Friday last week).
• However, the IDR slightly weakened against USD. The IDR was closed at IDR14,842/USD on Monday (vs IDR14,830/USD on Friday last week).
• The government will conduct auction for 7 series of SUN (including FR0098 new issuance) targeting IDR19tn and max IDR28.5tn today.
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 7.10-7.30% for today.
• Attractive Indo GB series to be traded today : FR0081, FR0086, FR0090, FR0064, FR0082, FR0087, FR0091, FR0096.
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