IDR: INDOGBs Slip, Rupiah Holds Steady After Bank Indonesia Meeting
Mar-19 08:44
Spot USD/IDR held relatively steady after Bank Indonesia kept interest rates on hold, finishing the session +100 figures at 16,525. USD/IDR 1-month NDF last trade +11 figures at 16,555. The INDOGB space has been showing some weakness as the BI media briefing went on.
- The central bank left its key rate unchanged at 5.75% but said that it would explore room for cutting interest rates further based on data and exchange-rate movements.
- Some analysts draw attention to the change in wording surrounding IDR moves:
- BNY noted that the description of the rupiah as "manageable" suggests a more permissive stance towards currency weakness. Back in February, BI said that the rupiah was "under control".
- MUFG said that Bank Indonesia lacks the flexibility to defend the rupiah, as global and domestic headwinds virtually preclude a rate hike, hence the IDR will likely depreciate further.
- Governor Perry Warjiyo stressed that the plan to overhaul Indonesia's financial sector law will merely clarify and emphasise rather than change Bank Indonesia's current mandate.
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EURIBOR OPTIONS: Call spread buyer
Feb-17 08:37
ERM5 98.25/98.37cs, bought for 0.25 in 17k.
GILTS: Futures Gap Lower At The Open; Feb 12 Low Intact For Now
Feb-17 08:33
Gilt futures gap lower at the open, catching up with weakness in core EGBs and posting fresh session lows of 92.53 at typing (-77 ticks today).
- Zooming out, a bull cycle is still in play and the pullback from the Feb 6 high appears corrective for now. The Feb 12 low at 92.31 remains intact, while firm resistance is the Feb 10 high at 93.71.
- The cash curve has bear steepened, with yields 5-7bps higher. 10-year yields are up to 4.57%, just short of last Wednesday’s high of 4.58%. The 10-year Gilt/Bund spread has widened 1bp to 208bps.
- For more colour on weekend news and this week’s calendar, see our morning STIR note above.
BONDS: Treasuries and Gilt Roll view
Feb-17 08:31
Most Desks will be starting to look at rolling their March Positions into June, pace should be expected to pick up towards the end of the Week, and will be completed next Week.
JPM:
- WNA: Bullish.
- USA: Bullish.
- UXY: Mildly bearish.
- TYA: Mildly bearish.
- FVA: Bearish.
- TUA: Bearish.
UBS:
- UBS recommend selling the Gilt March future and buying the June future "owing to valuations, a high switch potential and given positioning appears on the long side."
