Global Market Update
• The 10-year U.S. treasury yield spiked 13 bps to 1.57% on Wednesday (11/10/21). U.S. treasury yields increased 3-15 bps along the curve.
• U.S. stocks market closed lower last night with DJI slipped 0.66%, S&P 500 fell 0.82% and Nasdaq Composite plunged 1.66%.
• U.S. consumer price index (CPI) surged to 0.9% MoM or 6.2% YoY higher in Oct-21, the highest level in 30 years.
• CPI figure surpassed the market estimation at 0.6% MoM and 5.8% YoY respectively, where the energy sector experienced the biggest raise.
• Another drop is recorded in the U.S. jobless claims to seasonally adjusted of 267,000 for the week ending November 6 th , below the previous period which then became the lowest since Mar-20.
• Germany’s inflation rate climbed to 0.5% MoM in Oct-21, affected by the ongoing supply chain disruptions.
• On the annual basis, Germany’s CPI jumped to 4.5% YoY, in line with the consensus but slightly higher than the previous month’s at 4.1% YoY.
• China also reported an increase in its inflation rate to 0.7% MoM or 1.5% YoY in Oct-21, higher than the September’s figure. This hike primarily driven by surging costs, poor weather and shipping issues for some commodities.
• Furthermore, China’s producer price index (PPI) rose to a level of 13.5% YoY in Oct-21, a 110 bps above the market forecast of 12.4%.
Domestic Market Update
• The 10-year rupiah denominated government bond yield fell 1 bps to 6.01% yesterday. This is in line with our daily forecast range of 6.00%-6.10%.
• The value of rupiah slightly depreciated against at USD to IDR 14,253/USD yesterday. Meanwhile 5-year Indo CDS dropped to 82.61 bps at the same time.
• Indonesia's banking industry continued to strengthen in 9M21. As of Sep-21 domestic banks loan disbursement rose 2.21% YoY; TPF grew by 7.69% YoY and NPL fell to 3.22% (vs 3.35% in Aug-21).
• We expect this positive trend to continue in 4Q21. Credit is expected to continue growing while asset quality improving at the same time.
• Worth noted that demand for credit started rising along with the further decline in interest rates across loan types.
Market Projection
• We expect 10-year Indo GB yield to marginally rise on Thursday (11/11/21), given the rise in the U.S. treasury yields following inflation data release.
• Despite the potential upside in yields, we maintain our daily forecast range for 10-year Indo GB yield at 6.00-6.10% today.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0088, FR0083 and FR0092.
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