Global Market Updates
• Yields on the US government bond keep rising as markets await further development of debt ceiling negotiations.
• The short term bond of 2-year benchmark yield increased 8 bps to 4.09%, whereas the 10 year benchmark rose by 3 bps to 3.54% on Monday (May 16, 2023).
• Rising yields in the government bond market has triggered equity market correction yesterday.
• The DJI turned out to be the worst performer after declining by 1.01% while NDX only fell 0.18% at the same time.
• Deadline for debt ceilings is approaching as Treasury Secretary Janet Yellen said that US may default on its debt obligation soon by early Jun-23 should the deal about debt limit is not achieved.
• On the other hand, markets also digest recent Fed’s officials commentary on inflation and rate which reiterated the still hawkish stance.
Domestic Market Updates
• The benchmark LCY government bond price traded up on May 16, 2023 with the 10-year yield decreased by 1 bps to 6.40%.
• Besides that, other benchmark particularly on the shorter-term also experienced a yield decline.
• The IDR depreciated against other major currency and falling 0.10% against USD to IDR14,820/USD yesterday, in the midst of stabilizing CDS.
• Investors demand for government bond in the latest auction showing an improvement as the incoming bids value hit IDR65.5tn or higher than previous auction of IDR45tn.
• Despite attracting higher demand, the awarded bid of the 7 series offered only amounted at IDR15tn.
• Higher demand in the latest auction showed investors appetite given a more resilient bond market and also driven by higher liquidity in the market.
Market Forecast
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.35-6.45% for today.
• Attractive Indo GB series to be traded today : FR0046, FR0070, FR0077, FR0084, FR0086, FR0091, FR0088, FR0050.
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