Global Market Update
• The 10-year U.S. treasury yield remained at 1.56% on Monday (01/11/21). Meanwhile, U.S. treasury yields rose by 2-5 bps along the curve ahead of the Fed policy meeting.
• The Federal Reserve will hold its two-days meeting on Tuesday and Wednesday, where tapering program in monthly bond purchases of USD120bn becomes the main agenda to discuss. An interest rate hike is further expected following the upcoming meeting.
• U.S. stocks market closed at gain last night, led by Nasdaq Composite’s rise of 0.63% and followed by DJI and S&P 500’s that jumped 0.26% and 0.18% respectively.
• U.S. ISM Manufacturing PMI slipped 0.3 point to a level of 60.8 in Oct-21 from 61.1 in Sep-21. Supply disruptions and inflation highlighted as factors behind a slower production pace.
• U.S. construction spending in Sep-21 plunged to a level of -0.5% to a seasonally adjusted annual rate of USD1.57tn. This figure is below both consensus and revised August’s rate at 0.3% and 0.1% respectively.
• Global manufacturing activity remained solid in Oct-21 as reflected on PMI data. Manufacturing activities in Australia, Japan, China, India, Russia and Canada rose last month. The figures were above previous month and consensus estimate.
Domestic Market Update
• The 10-year rupiah denominated government bond yield inched up to 6.08%. This is in line with our daily forecast range of 6.00%-6.10%.
• The value of rupiah depreciated against USD to IDR 14,248/USD on Monday (11/01/21). Meanwhile 5-year Indo CDS stayed at 81.94 bps.
• Indonesia’s CPI was recorded at 106.66 or increasing by +0.12% MoM/+1.66% YoY in Oct-21. The inflation number was above our projection and consensus estimate at +1.61% YoY/+1.64% YoY.
• The major driver of October inflation was rising price of airlines transportation ticket.
• We observed that inflation started to pick up in 2H21. We expect this trend to continue until the end of 2021. However we see that inflationary pressure will remain benign and manageable.
Market Projection
• Government will conduct an auction of Sovereign Sharia Securities (SBSN) for 5 series with the indicative target set at IDR4tn on Tuesday (11/02/21). The indicative target was lower than previous auction at IDR5tn.
• With lower issuance target, remain high investors appetite and no significant external pressure we believe that government will successfully raised funding through today’s auction.
• We expect the 10 year Indo GB yield to move sideways within range of 6.00% - 6.10% on Tuesday (11/02/21).
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0083 and FR0092.
