Global Market Update
• The U.S. 10-year treasury yield edged down 3 bps to 1.42% on Wednesday (12/01/21).
• U.S. treasury yields muted after the Fed said could quicken the tapering process.
• U.S. stocks market lost last night with Nasdaq Composite plunged 1.83%, DJI dropped 1.34% and S&P 500 was down 1.18%.
• The decline in the stock market followed the announcement of first Omicron case in California.
• ADP reported that U.S. private businesses employed 534,000 people in Nov-21, lower than the Oct-21 figure but still surpassed the estimate of 525,000.
• Institute for Supply Management recorded a rise to 61.1 for Nov-21’s U.S. manufacturing PMI, aligned with the market forecast despite the materials shortages due to pandemic.
• The Markit’s manufacturing PMI for Eurozone inched up to a level of 58.4 in Nov21, remained lower than the preliminary reading at 58.6.
• Italy and France’s manufacturing PMI also increased and while Germany and Spain’s figure fell amid the ongoing supply chain disruptions, input shortages and inflationary pressures.
• Inflation rate in South Korea’s rose to a level of 3.2% in Oct-21, exceeding the Sep-21’s at 2.5% and market projection’s rate at 3.15%.
Domestic Market Update
• The 10-year Indo GB rose 4 bps to 6.13% on Wednesday (12/01/21), remained in line with our daily forecast range of 6.05-6.15%.
• Yields in some of benchmark series have been seen to surpass the MA20 yields, therefore the upward pressure in yields may continue in Dec-21
• The value of IDR against USD depreciated to a level of IDR14,347/USD yesterday. Meanwhile, 5-year Indo CDS rose to 89.85 bps.
• This movement was attributable to the spread of Omicron variant rising the risk and volatility of global and domestic financial market as well as uncertainty around the inflation outlook.
• Indonesia’s inflation rate hiked to a level of 1.75% YoY in Nov-21, up from 1.66% YoY in the prior month hitting the highest since the start of 2021.
• Even after hitting the highest level since the start of 2021, Indonesia’s inflation remained below central bank’s target of 2-4%.
Market Projection
• Given the rise in external pressure due to the spread of Omicron variant, we expect the domestic Indo GB market to rise with the 10-year Indo GB yield to move within range of 6.10%-6.20% today.
• Attractive Indo GB series to be traded today: FR0081, FR0084, FR0086, FR0090, FR0071, FR0078, FR0082
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