The SBN market responded negatively to US inflation, which reached 9%. FFR Futures support a 100 bps rate hike at the end of July, to reduce Headline Inflation or June CPI which reached 1.3% MoM (Vs. May 1.0% MoM) and 9.1% YoY (Vs. May 8.6% YoY ). Inflation in June was driven by spikes in fuel and natural gas prices, which rose 11.2% MoM and 8.2% MoM, respectively. The increase also occurred in core inflation, with CPI Ex. Food and Energy which reached 0.7% MoM (Vs. May 0.6% MoM) and 5.9% YoY (Vs. May 6.0% YoY). This raises the question of how severe the impact of the Fed’s aggressive Hawkish on a potential US economic recession will be, and has again boosted the safe-haven interest in UST10Y and USD. FR0091 led yesterday’s yield gains, up more than 12 bps to 7.34%.

Corporate Bonds
Protelindo to Issue IDR 1 Trillion Bonds. PT Professional Telekomunikasi Indonesia (Protelindo) issued Shelf-Registered Bonds III Phase I Year 2022 worth IDR 1 trillion, which is part of Shelf-Registered Bonds III with a total value of IDR 5 trillion. Protelindo offers three series of bonds in this first phase of issuance. Series A has a 370-day tenor, Series B has a 3-year tenor, and Series C has a 5-year tenor. (Kontan)

Domestic Issue
Carbon Tax Applicable This Year. The government has postponed the implementation of the carbon tax twice, most recently the implementation of the carbon tax which was supposed to be implemented in July 2022 was postponed. This delay is the second time in 2022. Actually, the carbon tax would be implemented in April 2022. However, the policy was postponed and the plan is to take effect in July 2022. Unfortunately, this policy is delayed again. The Minister of Finance confirmed that the implementation of the carbon tax would still be carried out this year by targeting coal-fired power plants (PLTU). (Kontan)

Expectations of an increase in the Trade Balance surplus and export growth are positive catalysts. Indonesia’s Trade Balance in June is projected to have a surplus of +USD3.5B (Vs. May +USD2.9B); June exports are projected to grow +30.3% YoY (Vs. May +27% YoY), as the rupiah exchange rate stabilizes and depreciates in the range of IDR15,000/USD. On the other hand, investors are still concerned about the BI 7DRRR issue in July, which based on Bloomberg survey data remains at the level of 3.50%.

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