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21 Januari 2022

Fixed Income Report - January 21, 2022

Global Market Update

• The 10-year UST yield closed at 1.81% last night. The short term interest rate indicated by 2-year maturity note yield keep hovering around 1%.
• US stock edged lower with DJI dropped 0.89%; S&P 500 fell 1.15% and Nasdaq Composite was corrected 1.30%.
• US initial jobless claims hit the highest level since Oct-21. As at Jan.15, initial fillings for jobless claims totaled 286,000.
• The initial jobless claims figure was well above consensus estimate of 225,000 and increased substantially from the previous period of 231,000.
• PBoC slashed its key lending rates or loan prime rate 1Y and 5Y by 10 bps & 5 bps respectively.
• This was the second straight month of China’s central bank rate cut as policymakers sought to cushion a slowdown in economic recovery due to multiple headwinds including the spread of Omicron variant, soaring cost of materials as well as decelerating property sectors.

Domestic Market Update
• The 10-year Indo GB yield fell 1 bps to 6.40% on Thursday (01/20/22) in line with our daily forecast range of 6.35-6.45%.
• The IDR value appreciated and closed at IDR14,338/USD (vs IDR14,363/USD on Wednesday).
• Risk premium increased with Indonesia’s 5-year CDS rose to 86.13 bps (vs 85.83 bps in the previous day). • As we have already expected, Bank Indonesia decided to hold BI 7 Day Reverse Repo Rate at 3.5%.
• However BI has started to normalize the easy policy by increasing rupiah reserve requirement for conventional, commercial and sharia banks starting from Mar-22.
• However BI said that the adjustment made also taking into account banking liquidity so banks ability to disburse loan and buying government bond will not be affected.

Market Projection
• Given the recent development, we expect the 10-year Indo GB yield to move within range of 6.35-6.45% today.
• Attractive Indo GB series to be traded today: FR0084, FR0086, FR0090, FR0064, FR0082, FR0087.

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