Global Market Update
• The 10-year U.S. treasury dropped 6 bps to 1.44% on Tuesday (11/30/21). U.S. treasury yields as well fell 2-9 bps along the curve.
• U.S. stocks market closed weaker last night with S&P 500 slid 1.90%, DJI and Nasdaq Composite edged down 1.86% and 1.55% consecutively. The drop was driven by statement that Omicron may reduce Covid-19 vaccine effectiveness.
• Yesterday, The Fed’s chairman Jerome Powell signalled the Omicron may pose downward pressures to the economy, employment figure and higher uncertainty around inflation. Treasury secretary Janet Yellen also urged the rising of debt ceiling during this testimony.
• Following this statement, many sources indicate that the new Covid-19 variant can threaten the U.S. Central Bank ability to retain the benchmark overnight interest rate near zero and also decelerate its tapering timeline.
• The ECB’s Vice President Luis de Guindos recently stated that it will continue to buy bonds with no rate hike throughout next year to advance the bloc’s economic recovery. Its Pandemic Emergency Purchase Programme (PEPP) of EUR1.85 tn ending in Mar-22 will also be resumed if necessary.
• The advanced reading of consumer price inflation figure in Eurozone expected an increase of 0.50% MoM in Nov-21, slower than the prior month’s pace at 0.80% MoM.
• On the annual basis, Euro Area’s inflation rate is projected to advance 4.9% YoY in Nov21, hitting its 30-year high. This is higher than the Oct-21 figure of 4.1% YoY, primarily driven by surging energy and services costs.
• China’s NBS manufacturing PMI jumped to 50.1 in Nov-21, above the market forecast of 49.6. This was the first increase in four months was attributable to the application of some policy measures, recovery from power shortage and a significant fall in raw material prices.
• Markit Economics recorded Australia’s IHS manufacturing PMI to a level of 59.2 in Nov-21, up from 58.2 in Oct-21 along with improvement in domestic economy.
Domestic Market Update
• The 10-year Indo GB edged up to 6.09% on Tuesday (11/30/21), remained in line with our daily forecast range of 6.05-6.15%.
• The value of IDR against USD depreciated to a level of IDR14,332/USD yesterday. Meanwhile, 5-year Indo CDS rose to 87.52 bps.
• We noted there are 22 corporate bonds and 12 medium term notes that will mature in Dec21 with a total value amounted at IDR7.94tn and IDR1.55tn respectively.
• The government issued 4 series of VR bonds (VR0066,VR0067, VR0068, VR0069) with the value of IDR58tn through a private placement scheme with Bank Indonesia (BI) under SKBIII Government-BI.
• Indonesia manufacturing PMI decreased to 53.9 points in Nov-21 from 57.2 in Oct-21 according to IHS Markit. Despite the drop, manufacturing activities in Indonesia recorded an expansion in the last 3 consecutive months along with the decline in Covid-19 daily cases.
Market Projection
• Today, Statistics Indonesia will announce Nov-21’s inflation rate. We predict that CPI Nov21 will rise 0.33% MoM/1.71% YoY, in line with the consensus and Central Bank’s estimate.
• We expect the domestic Indo GB market to rise with the 10-year Indo GB yield to move within range of 6.05%-6.15% today.
• Attractive Indo GB series to be traded today: FR0081, FR0084, FR0086, FR0090, FR0071, FR0078, FR0082
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