Company Update

17 Februari 2022

Fixed Income Report - February 17, 2022

Global Market Update

• Yields on US government bond decreased 2-6 bps along the curve on Wednesday (02/16/22).
• The benchmark 10-year UST yield was 1 bps lower and closed at 2.03%. Meanwhile 2-year UST yield dropped 5 bps to 1.53% at the same time.
• Market focus remain on geopolitical tensions, economic release data and also summary of Jan-22 Fed’s meeting.
• Biden said that Russian military units remained in threatening position with more than 150k troops still in the Ukrainian border after claim that Russia has returned its army to their home base.
• On the data front, US Commerce Department reported stronger than expected retail sales in Jan-22.
• US retail sales grew 3.8% MoM, well above consensus estimate at 2% MoM and higher than previous month figure. In Dec-21, US retail sales contracted 2.5% MoM.
• The minutes of Fed’s meeting in Jan-22 was released yesterday showed that US central bank is preparing interest rate hikes and discussed ways to reduce balance sheet including selling some MBS.
• US equity market closed mixed last night with DJI and Nasdaq fell 0.16% and 0.11% respectively while S&P 500 rose 0.09%.

Domestic Market Update
• Domestic government bond yields were slightly lower on Wednesday (02/16/22).
• The benchmark 10-year Indo GB yield stayed at 6.50% while 5-year Indo GB yield fell 2 bps to 5.30% at the same time.
• The IDR value continued to strengthen against USD and was closed at IDR 14.256/USD on Wednesday (vs IDR 14.303/USD in the previous day).
• Furthermore, country’s risk premium also dropped. The 5-year Indo CDS slipped 2 bps to 95.42 bps.
• From the pandemic side, Indonesia daily Covid-19 infection hit an all time high with 64,718 yesterday according to official data. Daily cases were above the peak of 2nd wave outbreak in 3Q21.
• Domestic daily cases were approaching our upper case scenario. We estimated peak of daily cases to hit 72,133 in the 3rd week of Feb-22 and it takes 77 days for the curve to flatten which mean the 3rd wave is expected to end in 3rd week of Mar-22 based on our model.

Market Projection
• Given the recent development on global and domestic market, we expect the 10 year Indo GB yield to move within a range of 6.45-6.55% for today.
• Attractive Indo GB series to be traded today: FR0090, FR0071, FR0078, FR0052, FR0054 and FR0091

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