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Inversion Press Benchmark FR0078 Yield

By administrator | July 7, 2019 | Finance.
Inversion Press Benchmark FR0078 Yield

Inversion Press Benchmark FR0078 Yield

Inversion Press Benchmark FR0078 Yield. A week, the price of the rupiah government bonds continued strengthening until the yield rate of the FR0078 10Y benchmark series returned to 7.21%, the lowest level since the beginning of June last year. The strengthening of government bonds (Surat Utang Negara, SUN) prices in the week was due to increasing the positive sentiment of the potential decrease in US and Indonesian benchmark interest rates.

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The increasing interest rate option will boost the price of SUN circulating in the market. The rising of the SUN’s price along with the strengthening occurred in other government bond emerging markets. Data Refinitiv shows the strong price of the SUN is reflected in the four benchmark series. The yield that is the reference to the investment obtained by investor is also more common as a reference to bond transactions rather than price because it reflects coupons, tenor, and risk.

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For the 10Y reference series that is often considered and transacted in the market, the increase in prices and the yield decline occurred 15.2 bps to 7.21% from the previous week 7.36%. In addition to the 10Y benchmark, reinforcement also occurs in the other three series that are the reference FR0077 tenor 5Y, FR0068 tenor 15Y, and FR0079 with a tenor of 20Y. The magnitude of 100 bps equals to 1%.

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The appreciation of the SBN today also made the rupiah bond spread of 10Y tenor with US Treasury similar tenor reached 525 bps, narrowed from the position of the previous week 536 bps. US Treasury Yield 10Y dropped to 1.96% from last week’s position of 2%. Related to the US Treasury market, it is still happening in the 3-month to 10Y tenor, which is common since the trade war between China and the US last April. In fact, the difference between the two reference series has already reached above 20 bps early July.

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Nowadays global market participants are looking forward to the inversion that occurs in the tenor of 3 months to 10Y, as the indicator is more reaffirmed that the potential of the US recession is getting closer than other tenor. Inversion is a condition higher yield shorter series than the longer yield series.

The inversion forms the inverted yield curve, which is a reflection of investors who are more in the US Treasury a long series than the shorter ones because of the rate there will be short term contractions, as well as indicators of potential economic pressure even to the crisis.

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