Global Market Update
• The 10-year U.S. treasury yield slowly inched up 5 bps to 1.50% on Monday (11/08/21). U.S. treasury yields also hiked 2-9 bps along the curve.
• U.S. stocks market closed at gain last night with DJI grew 0.29% and Nasdaq Composite edged up 0.07%. S&P 500 stood up at 4,701.70 for the first time (+0.09%), reflecting the investors’ positive response towards the approval of infrastructure bills last week.
• U.S. consumer inflation expectations in Oct-21 rose to 5.7%, higher than the previous month’s forecast and consensus estimate of 5.3% and 5.4% respectively.
• Yesterday’s speeches from The Fed officials conclude inflation, resulted from current supply disruptions, now became their main concern before tightening any monetary policy.
• Market participants closely watched the development of China’s property developer Evergrande debt crisis. According to Reuters, some holders of offshore bonds issued by Evergrande unit business (Scenery Journey) had not received interest payments due on Nov 6.
Domestic Market Update
• The 10-year rupiah denominated government bond yield fell 3 bps to 6.02% to start this week. This is in line with our daily forecast range of 6.00%-6.10%.
• The value of rupiah slightly appreciated against at USD to IDR 14,258/USD yesterday. Meanwhile 5-year Indo CDS rose to 83.30 bps.
• Bank Indonesia (BI) reported that Consumer Confidence Index (CCI) in Oct-21 bounced back to above 100 points.
• Consumer turned to optimist tone as reflected in the rise of CCI from 95.5 in Sep-21 to 113.4 in Oct-21.
• On the other hand, rising energy price globally also bolstered domestic coal price. Ministry of Energy & Mineral Resources set Indonesia coal reference price (HBA) at USD215.63/ton in Nov-21. HBA increased by 33% from the previous month.
• The domestic coal price has stayed stubbornly high following the global trend on the back of : 1) rising demand in China and other markets as the northern hemisphere entering winter; 2) supply chain disruption in producing countries. We expect coal price to remain high at least until the end of 2021 before moderating next year.
• We expect Indonesia’s GDP to expand more than 5% YoY in 4Q21 on the back of positive catalyst including : 1) higher mobility due to improving pandemic situation; 2) acceleration of government spending in the last quarter; 3) continued banks credit expansion as well as 4) surging commodity price that boost exports
Market Projection
• Given the rise in U.S. treasury yields and the CDS, we expect the 10-year Indo GB to increase and traded within range of 6.00% - 6.10% today (11/09/21).
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0088, FR0083 and FR0092.
Disclaimer
