Company Update

18 Februari 2022

Fixed Income Report - February 18, 2022

Global Market Update

• Yields on US government bond decreased 3-6 bps along the curve on Thursday (02/17/22) as Russia-Ukraine geopolitical tensions continued to be in focus.
• The benchmark 10-year UST yield fell 8 bps to 1.96%. Meanwhile 2-year UST yield dropped 5 bps to 1.47% at the same time.
• Ukraine has accused pro-Russian separatists of attacking a village near the border.
• On the data front, US labor market condition was disappointing. US weekly jobless claims data came in worse than expected with initial claims reached 248k higher than consensus estimate at 218k.
• However Fed’s Jan-22 minutes release helped to limit the drop in UST yields. The benchmark US government bond remained in the highest level in a month.
• Fed is ready to start tightening anytime soon. Interest rate hike is likely in Mar22 and followed by balance sheet reduction afterwards.
• US equity market tumbled with DJI fell 1.78%, S&P 500 drop 2.12% and Nasdaq Composite was down 2.88% last night.

Domestic Market Update
• Domestic government bond yields were still flattish yesterday (02/16/22).
• The benchmark 10-year Indo GB yield stayed at 6.50% while 5-year Indo GB yield rose slightly 1 bps to 5.31% at the same time.
• The IDR value depreciated against USD and was closed at IDR 14,318/USD on Thursday (vs IDR 14,256/USD in the previous day).
• Furthermore, country’s risk premium also increased. The 5-year Indo CDS rose nearly 2 bps to 97.21 bps.
• Indo government bond market started to record an inflows of IDR3.13tn in the last two weeks.
• On the data front, Indonesia Property Price Index rose 1.47% YoY in 4Q21 higher than previous quarter of 1.41% YoY. Property sales contracted 11.6% YoY in 4Q21, improving from previous quarter contraction of 15.2% YoY.
• We see the improvement was attributable to favorable condition including : 1) lower interest rate; 2) government tax relax and 3) better mobility in 4Q21 along with the decrease in Covid-19 daily cases.

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: FR0070, FR0077, FR0090, FR0071, FR0078, FR0054 and FR0091.

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