Global Market Update
• The benchmark 10-year note yield was closed at 3.68% on Friday (09/23/22)
• On the other hand, the 2-year benchmark increased 9 bps to 4.20% at the same time, hitting its level high since Oct-07.
• Spread between 2/10-year UST note yield was at -52 bps or widening from the previous day position at -39 bps, indicating worsen yield curve inversion.
• US stock indices continued to fall on Friday. The DJI fell 1.62%; S&P 500 lost 1.72% whilst Nasdaq Composite dropped 1.80%.
• Following the Fed move to increase the benchmark rate by 75 bps on Sep-22, BoE also hiked another 50 bps to 2.25% and now the key interest rate hit the highest level since 2008.
• Yield on UK’s benchmark 10-year government bond spiked 33 bps to 3.82%. Elsewhere, Germany’s 10-year benchmark rate also reached 2%.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) increased 3 bps at 7.25% on Friday (09/23/22).
• The increase in Indo GB yield was in-line with IDR depreciation hitting 15,000/USD and rising risk premium.
• Indonesia’s 5-year CDS rose to above 140 bps last week and was closed at 144.33 bps on Friday last week.
• Furthermore, IDR continued to depreciate against USD. The IDR was closed at IDR15,038/USD on Friday, hitting the lowest level since the start of the year.
• The IDR depreciation was also in-line with foreign outflows. BI reported foreign investors booked a net sell of IDR3.53tn largely driven by sell of in government bond amounting to IDR3.80tn during the period of 19-22 September.
• On the data front, BI reported that M2 position was at IDR7,849tn in August-22. M2 grew 9.5% YoY, slightly lower than the previous month's of 9.6% YoY.
• The increase in M2 was influenced by credit growth (+10.4% YoY Aug-22).
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 7.15-7.35% for today.
• Attractive Indo GB series to be traded today : FR0063, FR0070, FR0077, FR0081, FR0086, FR0090, FR0064, FR0095, FR0071, FR0078, FR0091.
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