Global Market Update
• U.S. bond and stocks market closed on Friday (12/24/21) due to Christmas holiday.
• Data from South Africa, England and Scotland suggested that Omicron variant appeared to have lower hospitalization risk compared to other strains, a two-third lesser than Delta.
• However, scientist further emphasized on the importance of third jab for additional protection from the new Covid-19 variant.
• Japan MoF unveiled its plan to cut the issuance of treasury discount bills by YEN13.6tn while also boosting the issuance of 40-year government bonds in the next fiscal year.
• Moreover, MoF explained that slashing the sales of treasury discount bills aimed to cover the soaring debt generated throughout the pandemic. Meanwhile, more long-end debts are issued due to high investors’ demand.
• Japan recorded a significant increase in its Nov-21 inflation rate to 0.6% YoY, up from 0.1% in the previous month. The latest figure considered the highest in twoyear time where upwards pressures mainly driven by surging energy and material costs.
• While Japan’s core inflation rate, that excludes food prices, rose to a level of 0.5% in Nov-21, slightly above the consensus of 0.4%. It is noted that the recent rate was still below the central bank’s target at 2% and other advanced economies.
Domestic Market Update
• The 10-year Indo GB slipped 3 bps to 6.32% on Friday (12/24/21), in line with our daily forecast range of 6.30-6.40%.
• The value of IDR against USD strengthened to IDR14,221/USD last Friday. Meanwhile, 5-year Indo CDS fell to a level of 74.05 bps.
• Foreign flows transaction data throughout 20-23 December 2021 reported that non-resident investors have booked a net selling of IDR0.13tn in the domestic market according to BI.
• The net sell was reported in equity market of IDR0.21tn while foreign investors booked a net buy in government bond market amounted at IDR0.08tn. We think that outflows were quite small so that domestic financial market remained solid.
Market Projection
• Given the recent development, we expect the 10-year Indo GB yield to move within range of 6.25-6.35% today.
• Attractive Indo GB series to be traded today: FR0081, FR0084, FR0086, FR0090, FR0071, FR0078, FR0082, FR0087, FR0091, FR0092.
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