Weekly Bond Market

Fixed Wrap
Income Market
Weekly Bond Market Wrap April 3rd, 2023
Indonesia Country Rating • US government bond yields increased amid easing US banking turmoil issues
S&P BBB (Stable) spurred investors to shift their focus back to concerns about further monetary
Fitch BBB (Stable) tightening by the US Central Bank. Boston Fed President, Susan Collins, said that
Moody's Baa2 (Stable) inflation is still too high and more needs to be done to bring inflation down.
JCRA BBB+ (Stable) Meanwhile, St. Louis Fed President, James Bullard, said appropriate monetary
R&I BBB+ (Stable) policy can continue to put downward pressure on inflation. On the data front, US
Government Yield Forecast consumers appear to have shrugged off the bank failures, in which the US
2023F consumer confidence index climbed to 104.2 in March, from the previous month’s
Scenario
5-year 10-year 15-year 20-year level of 103.4, and also higher than Bloomberg consensus expectation of 101.0.
Meanwhile, the US house price index increased 0.2% in January, after declining
Optimistic 5.79 6.35 6.73 6.93
-0.1% in the previous month. In addition, the US pending home sales increased
Baseline 6.28 6.69 7.06 7.18 0.8% in February, higher than Bloomberg consensus expectation of a -3.0%
decline. Increasing home sales raised expectations that US inflationary pressure
Pessimistic 6.97 7.20 7.54 7.59 persists. Moreover, the US jobless claims report reflected a still tight labor market,
in which despite increasing to 198k last week, higher than the previous week’s
10-year LCY Bond Yield figure of 191k, the initial jobless claims figure was still lower than the one-year
10-Year LCY Yield 31-Mar (-1 day) (-1 week) average of 214k. A more upbeat economic data increased investors’ expectation
Indonesia 6.77 6.80 6.79 that inflationary pressure persists. However, pressure in the US bond market
US 3.47 3.55 3.38 eased slightly on the final trading day last week following softer-than-expected US
Germany 2.29 2.37 2.12
inflation. The Fed’s preferred inflation, PCE deflator, came in at 5.00% YoY in
UK 3.49 3.52 3.28
France 2.79 2.88 2.65 February, lower than Bloomberg consensus expectation of 5.10% YoY, and also
Japan 0.33 0.31 0.28 below January’s inflation of 5.30% YoY. The 2-year, 5-year, and 10-year US
China 2.85 2.86 2.87 Treasury yields climbed to 4.03% (+26 bps compared to the previous week’s
Malaysia 3.90 3.91 3.88
closing), 3.58% (+17 bps), and 3.47% (+9 bps), respectively.
Thailand 2.43 2.36 2.30
Singapore 2.93 2.96 2.84

Global Currencies
• Indonesia’s bond yields hovered around the flatline during the last five trading

Currency 31-Mar (-1 day) (-1 week)

days as increasing global market pressure due to higher US Treasury yields offset
USD/IDR 14996 15047 15153 by higher foreign fund flows to the domestic bond market. The 10-year
EUR/USD 1.084 1.091 1.076 government bond yield wavered only between 6.75% - 6.80% during last week
GBP/USD 1.234 1.239 1.223 and closed at 6.77%. The IDR strengthened to be lower than the psychological
AUD/USD 0.669 0.671 0.665
level of IDR15,000/USD and closed at IDR14,996/USD last week along with robust
USD/JPY 132.86 132.7 130.73
USD/CNY 6.874 6.871 6.867 foreign fund inflows. Foreign investors posted a net buy during the first four
USD/SGD 1.331 1.328 1.332 trading days last week, where foreign ownership in government securities was
USD/THB 34.143 34.144 34.218 recorded at IDR816.3 trillion as of March 30, 2023, from the previous week’s level
USD/MYR 4.415 4.421 4.428
(March 24, 2023) of IDR804.1 trillion. Hence, in March 2023, foreigners posted a
Indonesia Economic Data
net buy in government securities of IDR12.0 trillion, after recording a net sell of
Mar-23 Feb-23 Jan-23
CPI MoM (%) - 0.16 0.34
IDR7.6 trillion in the previous month. Year-to-date, foreign investors have posted
CPI YoY (%) - 5.47 5.28 a net buy of IDR54.1 trillion in government securities.
7DRRR (%) 5.75 5.75 5.75
Foreign Reserve
(US$ Bn)
- 140.3 139.4 • Market participants were more aggressive in the secondary market last week, in
Source : Bloomberg, Bahana Sekuritas FI Research which the average daily trading volume of government securities reached IDR17.1
trillion, higher than the previous week’s average daily trading volume of only
Analyst : Ariawan IDR12.5 trillion. In contrast with the secondary market, market participants were
Firman Hidayat

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 Weekly Bond Market Wrap

not aggressive in the primary market, where investors’ participation at last week’s bond auction was
only recorded at IDR29.3 trillion, lower than average bids in six previous bond auctions of IDR51.5
trillion. Still, the government managed to issue bonds in line with its initial target of IDR20.0 trillion at
this auction. Following last week’s auction, year-to-date, the government has successfully issued
IDR293.3 trillion of securities.

• Along with the US banking turmoil, most investors expected that a room for recession is more open
going forward. Still, despite a higher probability of recession (Bloomberg survey expects a 65%
probability of recession in the next 12 months), yet it may not be a deep one. Key economic indicators
this week will likely illustrate a lower possibility of a deep recession. The US payrolls report (which will
be released on Friday) may show slower hiring than the previous two months, still, it likely will still far
exceed the monthly gain Jerome Powell has said is consistent with population growth. Even if JOLTS
job openings data (which will be released on Tuesday) shows a decline, the ratio of job openings to
unemployed workers will remain high, indicating that the labor market is still tight. A persistently tight
labor market will limit the severity of the recession which is expected by most investors to take place
in 2H23. Hence, it may also slow the Fed’s responsiveness to negative GDP growth figures, and the
possibility of no rate cut this year is quite open. Given the higher possibility that the Fed will keep its
interest rate higher for longer, then, the likelihood of declining US Treasury yields may be more
limited in the near term.

• From the domestic side, investors will focus on March’s inflation data which will be released early this
week. Bloomberg consensus expects CPI to come in at 5.07% YoY in March 2023, lower than the
previous month’s figure of 5.47% YoY. Moreover, March’s core inflation is expected to reach 3.02%
YoY, slightly lower than February’s core inflation of 3.09% YoY. Given the lower inflationary pressure,
it may open a room for Bank Indonesia to keep its benchmark interest rate unchanged in the next
couple of months, adding positive news to the domestic bond market.

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 Weekly Bond Market Wrap
Exhibit 1. US Treasury yields increased last week Exhibit 2. Foreign fund inflows supported Indonesia’s
bond yield ...
7.8 Foreign Ownership in Gov't Securities 10-year Gov't Yield 840
5.5
2-year yield 5-year yield 10-year yield 30-year yield
7.6 820

5.0
7.4 800

(IDR Trillion)
4.5 7.2 780

(%)
(%)

7.0 760
4.0

6.8 740

3.5
6.6 720

3.0 6.4 700

06/12/2022

15/01/2023

24/02/2023
11/11/2022
16/11/2022
21/11/2022
26/11/2022
01/12/2022

11/12/2022
16/12/2022
21/12/2022
26/12/2022
31/12/2022
05/01/2023
10/01/2023

20/01/2023
25/01/2023
30/01/2023
04/02/2023
09/02/2023
14/02/2023
19/02/2023

01/03/2023
06/03/2023
11/03/2023
16/03/2023
21/03/2023
26/03/2023
31/03/2023

22/11/2022

22/12/2022

21/01/2023

20/02/2023
03/10/2022
08/10/2022
13/10/2022
18/10/2022
23/10/2022
28/10/2022
02/11/2022
07/11/2022
12/11/2022
17/11/2022

27/11/2022
02/12/2022
07/12/2022
12/12/2022
17/12/2022

27/12/2022
01/01/2023
06/01/2023
11/01/2023
16/01/2023

26/01/2023
31/01/2023
05/02/2023
10/02/2023
15/02/2023

25/02/2023
02/03/2023
07/03/2023
12/03/2023
17/03/2023
22/03/2023
27/03/2023
Source: Bloomberg, Bahana FI Research Source: Bloomberg, Bahana FI Research
Exhibit 3. … and also IDR movements Exhibit 4. Government bond trading volume increased
last week
15,800 Foreign Ownership in Gov't Securities USDIDR 840

15,700 average :
820
IDR17,054 bn
15,600

15,500 800
(IDR Trillion)

15,400 average :
780 IDR12,479 bn
15,300
760
15,200

15,100 740

15,000
720
14,900

14,800 700
17/12/2022

11/01/2023
03/10/2022
08/10/2022
13/10/2022
18/10/2022
23/10/2022
28/10/2022
02/11/2022
07/11/2022
12/11/2022
17/11/2022
22/11/2022
27/11/2022
02/12/2022
07/12/2022
12/12/2022

22/12/2022
27/12/2022
01/01/2023
06/01/2023

16/01/2023
21/01/2023
26/01/2023
31/01/2023
05/02/2023
10/02/2023
15/02/2023
20/02/2023
25/02/2023
02/03/2023
07/03/2023
12/03/2023
17/03/2023
22/03/2023
27/03/2023

20-Mar 21-Mar 22-Mar 23-Mar 24-Mar 27-Mar 28-Mar 29-Mar 30-Mar 31-Mar

Source: Bloomberg, DMO, Bahana FI Research Source: IDX, Bahana FI Research

Exhibit 5. Lower investors’ participation at last week’s Exhibit 6. YTD, Government has successfully issued
bond auction IDR293.3 trillion of securities

[IDR trillion] Source of Issuance Nominal Issuance (IDR)

67

59
56
Government Bond Auction 145,200,000,000,000
53

46
Government Sukuk Auction 76,000,000,000,000
USD-denominated Bonds 46,500,000,000,000
28 29

23 23 23 23 23 23
Retail Saving Bonds (SBR) 22,184,594,000,000
20 23 20 20 20 20 20
19

Private Placement 3,443,391,950,000

Total Issuance 293,327,985,950,000

3-Jan-23 17-Jan-23 31-Jan-23 14-Feb-23 28-Feb-23 14-Mar-23 28-Mar-24

Indicative Target Total Bid Nominal Awarded Source: DMO, Bahana FI Research

Source: DMO, Bahana FI Research

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 Weekly Bond Market Wrap
Exhibit 7. US economic calendar of April 3 - 7, 2023

Date Event Period Survey Actual Prior Revised

3-Apr-23 S&P Global US Manufacturing PMI Mar F 49.3 -- 49.3 --
3-Apr-23 Construction Spending MoM Feb 0.00% -- -0.10% --
3-Apr-23 ISM Manufacturing Mar 47.5 -- 47.7 --
3-Apr-23 ISM Prices Paid Mar 51.1 -- 51.3 --
3-Apr-23 ISM Employment Mar -- -- 49.1 --
3-Apr-23 ISM New Orders Mar 47.5 -- 47.0 --
3-Apr-23 Wards Total Vehicle Sales Mar 14.60m -- 14.89m --
4-Apr-23 Factory Orders Feb -0.50% -- -1.60% --
4-Apr-23 Factory Orders Ex Trans Feb 0.00% -- 1.20% --
4-Apr-23 JOLTS Job Openings Feb 10500k -- 10824k --
4-Apr-23 Durable Goods Orders Feb F -1.00% -- -1.00% --
4-Apr-23 Durables Ex Transportation Feb F -- -- 0.00% --
5-Apr-23 ADP Employment Change Mar 210k -- 242k --
5-Apr-23 Trade Balance Feb -$68.8b -- -$68.3b --
5-Apr-23 S&P Global US Services PMI Mar F 53.8 -- 53.8 --
5-Apr-23 S&P Global US Composite PMI Mar F 53.3 -- 53.3 --
5-Apr-23 ISM Services Index Mar 54.3 -- 55.1 --
6-Apr-23 Initial Jobless Claims 01-Apr 200k -- 198k --
7-Apr-23 Change in Nonfarm Payrolls Mar 240k -- 311k --
7-Apr-23 Change in Private Payrolls Mar 223k -- 265k --
7-Apr-23 Change in Manufact. Payrolls Mar 0k -- -4k --
7-Apr-23 Unemployment Rate Mar 3.60% -- 3.60% --
7-Apr-23 Average Hourly Earnings MoM Mar 0.30% -- 0.20% --
7-Apr-23 Average Hourly Earnings YoY Mar 4.30% -- 4.60% --
7-Apr-23 Average Weekly Hours All Employees Mar 34.5 -- 34.5 --
7-Apr-23 Labor Force Participation Rate Mar 62.50% -- 62.50% --
Source: Bloomberg

Exhibit 8. Indonesia economic calendar of April 3 - 7, 2023

Date Event Period Survey Actual Prior Revised

3-Apr-23 S&P Global Indonesia PMI Mfg Mar -- -- 51.2 --
3-Apr-23 CPI Core YoY Mar 3.02% -- 3.09% --
3-Apr-23 CPI YoY Mar 5.07% -- 5.47% --
3-Apr-23 CPI NSA MoM Mar 0.27% -- 0.16% --
Source: Bloomberg

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 Weekly Bond Market Wrap

Debt Research

Ariawan Firman Hidayat

Head of Fixed Income Research Fixed Income Analyst
ariawan.hargianto@bahana.co.id firman.hidayat@bahana.co.id
ext. 3618 ext. 3619

Debt Capital Market Team

groupbsfixedincome@bahana.co.id
Telp: +62 21 2505105, Fax:+62 21 5225889

Agus Aslichan Samodero Febryanto

Head of Debt Capital Market Fixed Income Sales
agusasli@bahana.co.id samodero@bahana.co.id
ext. 2587 ext. 2574

Ibnu Jatmiko Andi Michaella Edgina

Fixed Income Sales Fixed Income Sales
ibnu.jatmiko@bahana.co.id michaella@bahana.co.id
ext. 2584 ext. 2573

Sarah Immanuela Lidhyana Debora

Fixed Income Sales Fixed Income Sales
sarah.immanuela@bahana.co.id lidhyana.debora@bahana.co.id
ext. 2583

Siti Salamah
Fixed Income Administration
siti.salamah@bahana.co.id
ext. 3974

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