Company Update

12 November 2021

Fixed Income Report - November 12, 2021

Global Market Update

• The U.S. bond market was closed yesterday commemorating Veterans Day. • U.S. stocks market closed mixed last night. S&P 500 up 0.06%, Nasdaq Composite gained 0.52%, while DJI lowered 0.44%.
• Following the hot CPI data, an earlier interest rates hike is expected by the investors to happen around July rather than September next year.
• U.K. trade deficit fell deeper to GBP2.8bn in Sep-21, from GBP1.9bn in the previous period. Particularly, the imports increased 2.9% while the exports grew at a slower pace of 1.2%.
• The preliminary reading of U.K. GDP in 3Q21 expected a growth of 6.6% YoY or 1.3% QoQ, primarily boosted by hospitality, recreation and health sectors. Both figures remained below the consensus of 6.8% YoY and 1.5% QoQ.
• Australia seasonally adjusted unemployment rate jumped to 5.2% in Oct-21, above the market estimate and previous month’s of 4.8% and 4.6% respectively.
• The employment rate as well dropped to 12.83 million, 0.4% lower than the September’s figure. The weak employment trend was attributable to slower vaccination rates followed by lockdown in some states.

Domestic Market Update
• The 10-year rupiah denominated government bond yield rose 2 bps to 6.03% yesterday. This is in line with our daily forecast range of 6.00%-6.10%. • We noted the spread between 10-year Indo GB and 10-year U.S. treasury yield remained stable below 500 bps since 4Q21 started.
• The value of rupiah slightly depreciated against at USD to IDR 14,263/USD yesterday. Meanwhile 5-year Indo CDS dropped to 80.58 bps at the same time.
• Indonesia-Japan Local Currency Settlement transaction hit USD109.4mn/month in 2021. The value increased 10x from USD9.8mn/month last year according to BI. • The significant increase in LCS transaction between Indonesia-Japan is a positive catalyst for rupiah value.
• Now Indonesia has partnered with China, Malaysia and Thailand to have LCS transaction. With this policy we expect USD dependency can be reduced, therefore rupiah stability can be achieved.

Market Projection
• We expect 10-year Indo GB yield to sideways today (11/12/21), given the lack of catalyst. • 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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