Ineffective in May, speculation of a 75 bps July FFR hike. May high inflation (1.0% MoM; 8.6% YoY), breaking March peak inflation expectations (1.2% MoM; 8.5% YoY), convinced the Fed to be more Hawkish coming 3Q22. This makes CME FedWatch include the probability of a 75 bps FFR increase in their calculations. The weekend’s market moves, also amid the ECB’s decision on QE, and will raise interest rates by 25 bps, which also closes the negative -0.5% interest rate trend. Yields increased in almost all SUN benchmarks, with FR0091 up 0.6 bps to 7.18%.
Corporate Bonds
BNII: Pay off IDR 637.26 Billion Bonds. PT Bank Maybank Indonesia Tbk (BNII) has prepared funds of IDR 637.26 billion. Meanwhile, the funds will be used to pay off the IDR 624 billion bond principal. Furthermore, an amount of IDR 13.26 billion to pay off the interest on the 12th bond which will mature on July 3, 2022. (Emiten News)
Domestic Issue
BI: Projected Inflation in June 2022 at 0.32%. Based on a Bank Indonesia survey, price monitoring on the second week of June 2022, inflation in the month under review is estimated at 0.32% MoM, or lower than 0.40% MoM in May 2022. With these developments, the forecast for June 2022 inflation on a calendar year basis by 2.89% YtD, and on an annual basis by 4.05% YoY. Meanwhile, the main contributors to inflation in June 2022, including commodities: red chilies and cayenne peppers. (Kontan)
Recommendation
Inflation at the producer level, along with the limited supply of raw materials, plus the energy crisis, will suppress the company’s margins. US May Final Demand PPI is projected, posting inflation of 0.8% MoM (Vs. Apr. 0.5% MoM) and 10.8% YoY (Vs. Apr. 11.0% YoY). This data is released ahead of the June FOMC Rate Decision meeting, which is projected to raise the FFR to 1.25%-1.50%. This week, the government again offered PBS031, PBS032, PBS029, PBS034, PBS033, and SPNS 13122022 (New Issuance) in the planned Sukuk auction Tuesday (14/06).
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