Global Market Update
• The 10-year U.S. treasury yield edged up 2 bps to 1.47% on Wednesday (12/15/21). U.S. treasury yields climbed 2-4 bps along the curve.
• U.S. stocks market rebounded last night led by Nasdaq Composite adding 2.15%. S&P 500 and DJI also gained 1.63% and 1.08% respectively.
• As the inflation rate has been continuously heightening supported by strong employment data, the Fed mentioned in its meeting last night that the pandemicbond purchases will end by Mar-22, followed by three rates hike around late 2022 and four rates hike throughout 2023-24.
• Central bank will accelerate its tapering process by starting to buy bonds at a pace of USD60bn/month in Jan-22, a USD30bn lower than this month’s pace with further reduction coming in 2022.
• Moreover, the committee revised some of its Sep-21’s forecast for 2021 with projections for inflation inched up to 5.3% (vs 4.2%), unemployment rate fell to 4.3% (vs 4.8%) and economic growth softened to 5.5% (vs 5.9%).
• They also altered the Sep-21’s economic growth outlook for 2022 which raised to 4% (vs 3.8%) but the following year’s dragged down to 2.2% (vs 2.5).
• Meanwhile, major economies in the Euro Area, namely the U.K, Italy, France and Spain, reported a rise in their Nov-21’s inflation rate attributable to the shipments issues, surging energy prices and low base effect last year.
Domestic Market Update
• The 10-year Indo GB yield rose 1 bps to level of 6.38% on Wednesday (12/15/21), in line with our daily projection range of 6.30-6.40%.
• The value of IDR against USD remained at a level of IDR14,333/USD yesterday. Meanwhile, 5-year Indo CDS hiked to 78.28 bps.
• Yesterday, Statistics Indonesia reported that domestic trade balance recorded another surplus at a level of USD3.51bn in Nov-21, hitting the nineteenth month straight of trade surplus.
• The exports value hiked to 49.7% YoY in Nov-21, surpassing our projection of 44.86% YoY while reaching its all-time high at USD22.84bn.
• At the same time, the imports value also rose to 52.62% YoY in Nov-21 attaining its fresh record at USD19.33bn.
• This rate further exceeded the consensus of 37.55% YoY amid the rise in commodity prices and domestic demand.
Market Projection
• Today, Bank Indonesia (BI) will announce its 7-Day Repo Rate decision for Dec21, in which we foresee the rate will still be capped at a level of 3.5%.
• 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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