Global Market Update
• The 10-year U.S. treasury yield advanced 3 bps to 1.44% on Tuesday (12/14/21). U.S. treasury yields inched up 1-3 bps along the curve.
• U.S. stocks market weakened last night with DJI edged down 0.30%, S&P 500 fell 0.75%, while Nasdaq Composite dropped 1.14%.
• U.S. PPI noted a rise to 0.8% MoM/9.6% YoY in Nov-21, both exceeding the consensus estimates of 0.5% MoM/9.2% YoY attributable to the labor and supply disruptions.
• U.S. monthly core PPI, excluding food and energy sectors, also climbed to 0.7% MoM in Nov-21 from 0.4% MoM within the previous period. On the annual basis, it was up to 7.7% YoY in Nov-21 from 6.9% YoY, the fastest pace on the record.
• The U.S. Senate approved raising the federal government's debt limit by USD2.5tn, to about USD31.4tn, and sent it to the House of Representatives to pass and avert default risk.
• The industrial production in Euro Area grew to 1.1% MoM in Oct-21, well above the prior month’s of -0.2% MoM where significant growth can be seen in capital and non-durable consumer goods output.
• Japan’s monthly industrial production rate also advanced to 1.8% MoM in Oct-21, higher than the Sep-21’s figure at -5.4% MoM due to the easing of supply constraints in some export-reliant industries.
• However, Eurozone’s and Japan’s industrial production year-on-year figures softened to a pace of 3.3% and -4.1 YoY % in Oct-21 respectively, down from 5.1% and -2.3% YoY as of Sep-21.
Domestic Market Update
• The 10-year Indo GB yield rose 7 bps to level of 6.37% on Tuesday (12/14/21), above our daily projection range of 6.20-6.30%.
• The value of IDR against USD appreciated to IDR14,333/USD yesterday. At the same time, 5-year Indo CDS increased to a level of 78.06 bps.
• Rupiah strengthened ahead of international trade data release. We expect trade balance surplus to continue in Nov-21.
• We foresee exports value to jump 44.86% YoY and imports value to rise 38.13% YoY translating into USD4.61bn surplus.
• Foreign investors booked a net sell of IDR19tn in Dec-21. We believe that rising GB yields recently was attributable to the outflows and negative external sentiment from Covid-19 new variant Omicron widespread.
Market Projection
• Given the recent development, we expect the 10-year Indo GB yield to move within range of 6.30-6.40% today.
• Attractive Indo GB series to be traded today: FR0081, FR0084, FR0086, FR0090, FR0071, FR0078, FR0082, FR0087, FR0091, FR0092.
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