Global Market Update
• The 10-year U.S. treasury yield rose 5 bps to 1.60% on Wednesday (11/03/21). U.S. treasury yields also experienced the same trend as it moved up 1-4 bps along the curve.
• The Federal Reserves announced the tapering program will start within this month, with monthly reductions of USD10bn allocated in Treasury and USD5bn in mortgage-backed securities from the current monthly budget of USD120bn.
• The Fed Chair Powell further stated that there is no plan in rising the interest rates until job growth is recorded. In addition, inflation is expected to keep increasing until global supply chain disruptions is resolved around mid 2022.
• Following the result of The Fed’s meeting, U.S. stocks market responded positively last night. DJI added 0.29% while Nasdaq Composite jumped 1.04%. S&P 500 set a new all-time high as it climbed 0.65% to a level of 4,660.57.
• U.S. employment rate by private businesses increased to 571,000 in Oct-21, a 9.18% higher than the Sep-21’s figure at 523,000. This change considered as the fastest pace since Jun-21.
• Unemployment rate fell steadily in Euro Area to a level of 7.4% in Sep-21, wellaligned with the consensus. The labour demand increased as the loosening of mobility restriction along with declining Covid-19 cases.
• The ease of Covid-19 outbreak has further expanded the UK’s services sector. UK’ service sector PMI rose to 59.1 points in Oct-21, higher than the previous month’s at 55.4 points.
• The positive trend also experienced by China, in which its services PMI data rose to 53.8 points in Oct-21, slightly above Sep-21’s figure at 53.4 points.
Domestic Market Update
• The 10-year rupiah denominated government bond yield fell 1 bps to 6.06%. This is in line with our daily forecast range of 6.00%-6.10%.
• The value of rupiah depreciated against at USD to IDR 14,298/USD on Wednesday (11/03/21) ahead of the Fed policy meeting announcement. Meanwhile 5-year Indo CDS closed at 82.61 bps.
• Corporate bond issuance was recorded at IDR83.3tn in 10M21. The total issuance was 17.3% YoY higher than the same period last year.
• In our view, higher corporate bond issuance was driven by several factors including : 1) favorable market condition; 2) lower interest rates and yields; 3) robust investors demand amid ample liquidity.
Market Projection
• Given the Fed announcement of tapering and followed by rising U.S. treasury yields, we expect 10-year Indo GB to move higher yet remain within range of 6.00% - 6.10% today (11/04/21).
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0088, FR0083 and FR0092.
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