Global Market Update
• The benchmark 10-year note yield rose by 6 bps to 3.43% on Tuesday (09/13/22).
• On the other hand, the 2-year benchmark yield jumped 17 bps to 3.74% at the same time.
• Spread between 2/10-year UST note yield was at -32 bps, widening from previous position at -21 bps indicating a yield curve inversion.
• US stock indices tumbled. The DJI fell 3.94%; S&P 500 dropped 4.32%; Nasdaq Composite lost 5.16%.
• US stock market suffered the worst day since Jun-20 after Aug-22 CPI data release.
• US inflation rate increased 8.3% YoY last month. The figure was lower than the previous month rate of 8.5% YoY, yet still higher than consensus estimate of 8.1% YoY.
• Higher than expected inflation rate would likely to push Fed’s plan to raise the reference interest rate further.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) declined by 3 bps to 7.09% on Tuesday (09/13/22).
• Indonesia’s 5-year CDS increased 7.5 bps to 108.70 bps on Tuesday (vs 101.19 bps on Monday).
• The IDR slightly weakened against USD. The IDR was closed at IDR14,852/USD on Tuesday (vs IDR14,842/USD on Monday).
• The government has successfully issued IDR19 trillion worth of SUN at auction on Tuesday (13/09/22), hence achieving the indicative target that already set.
• The success of SUN issuance was influenced by the increase in investor interest as reflected in the value of incoming bids amounting to IDR52tn (vs. IDR47tn previous auction).
• We see a high demand for SUN series which will become next year's benchmark FR0096 (10-year benchmark) and FR009/New Issuance (15-year benchmark) with total incoming bids reaching IDR26.1tn or equivalent to 50% of the total incoming bids for the 7 issued SUN series.
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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