Global Market Update
• The 10-year U.S. treasury yield declined to 1.53% on Thursday (11/04/21) after the Fed announced their tapering plans. U.S. treasury yields fell 3-9 bps along the curve.
• U.S. stocks market closed mixed last night. S&P 500 and Nasdaq Composite hiked 0.42% and 0.81% respectively, while DJI noted a drop of -0.09%.
• U.S. jobless claims fell to 269,000 in the week ending of October 30th , lower than the market estimate of 275,000. This figure considered as the lowest level since Mar-20.
• Bank of England (BoE) announced its interest rate to be maintained at 0.1%, as well as its asset purchases with a target of GBP875 bn. No changes were made based on policy announcement.
• Eurozone’s services performance weakened in Oct-21, reflected in a fall of IHS Markit PMI data in Italy, Germany and Spain from the prior month’s.
• Despite the ease of Covid-19 mobility restrictions and stronger client demand, inflationary pressures pose a risk on growth as it results in a higher cost on inputs.
Domestic Market Update
• The 10-year rupiah denominated government bond yield slightly unchanged at 6.06% Thursday (11/04/21). This is in line with our daily forecast range of 6.00%- 6.10%.
• The value of rupiah depreciated against at USD to IDR 14,318/USD yesterday following taper announcement by the Fed. Meanwhile 5-year Indo CDS closed lower to 77.88 bps.
• Government of Indonesia decided to cancel all the scheduled government securities issuance in the rest of 2021. The cancellation of auction was due to the target of budget financing from securities issuance in 2021 has been met.
• We expect with the cancelation of auction in the end of 2021 would minimize supply risk. Therefore a short term decline in government bond yields is likely. However the impact should be temporary.
Market Projection
• We expect Indonesia GDP to expand by +1.63% QoQ/+3.59% YoY in 3Q21. Lower growth was driven by the implementation of tighter mobility restriction amid second wave of Covid-19 outbreak in Jul-Aug 2021.
• Given the cancellation of government securities issuance and lowering U.S. treasury yields, we expect 10-year Indo GB to decline and traded within range of 6.00% - 6.10% today (11/05/21).
• Attractive Indo GB series to be traded today : FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0088, FR0083 and FR0092.
Disclaimer
