Global Market Update
• Yield of US government bond continued to increase and hitting its highest level in the last decade starting this week.
• The benchmark 10-year note yield rose 20 bps to 3.88% on Monday (09/26/22).
• On the other hand, the 2-year benchmark increased 11 bps to 4.31% at the same time, hitting its level high since Oct-07.
• Spread between 2/10-year UST note yield was at -43 bps or narrowing from the previous day position at -52 bps.
• US stock indices continued to fall on Monday. The DJI fell 1.11%; S&P 500 lost 1.03% whilst Nasdaq Composite dropped 0.60%.
• The jump in US government bond yield has caused the equity market to tumble.
• In UK, its benchmark government bond yield also increasing hitting more 4.00%.
Domestic Market Update
• The benchmark 10-year Indo GB yield (FR0091) increased 10 bps at 7.35% on Monday (09/26/22).
• 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 150 bps on Monday and was closed at 156.88 bps.
• Furthermore, IDR continued to depreciate against USD. The IDR was closed at IDR15,128/USD on Monday, hitting the lowest level since the start of the year.
• Indonesia's International Investment Position (PII) recorded a decrease in Net Liabilities of USD270.4 billion in 2Q22 (vs. USD287.8 billion in 1Q22).
• The decrease in net liabilities was driven by: 1) a decrease in FFL & 2) an increase in FFA.
• FFL decreased due to the decline in the price of investment instruments & the strengthening of the USD.
• Government plans to conduct SUN auction for seven series targeting IDR19.00-28.50tn of funding, however, given current market condition, we expect the incoming bids value will be below previous auction.
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 7.25-7.45% 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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