Company Update

15 November 2021

Fixed Income Report - November 15, 2021

Global Market Update

• The 10-year U.S. treasury yield remained at 1.57% on Friday (11/12/21). U.S. treasury yields inched up 1-3 bps along the curve.
• U.S. stocks market closed higher last Friday, led by Nasdaq Composite’s hike of 1% followed by S&P 500 and DJI that were appreciated by 0.72% and 0.50% respectively.
• A continuous rising of inflation rate weighed down the U.S. Michigan consumer sentiment to 66.8 in Nov-21, as outlined in the preliminary reading. This figure was lower than the market estimate of 72.4.
• The advanced reading of 1-year U.S. inflation expectations reached its highest in 13 years as it rose to 4.9% in Nov-21, slightly above the Oct-21 figure of 4.8%. For the five-year outlook, University of Michigan’s inflation expectations maintained at 2.9% in Nov-21.
• Number of job openings in the U.S. recorded at 10.4 million in Sep-21, surpassed the consensus of 10.3 million. However the Sep-21 figure was below Aug-21 reading at 10.6 million.
• Eurozone’s industrial production stood up at 5.2% YoY in Sep-21, higher than the previous period’s figure of 4.9%.
• On the monthly basis, the industrial production rate in Euro Area was -0.2% MoM in Sep-21, resulted from delivery disruptions and high commodity prices. Germany and France noted a fall in their production, meanwhile Italy and Spain’s grew.
• The advanced reading of Japan GDP for 3Q21 climbed to a level of 0.5% QoQ and 1.9% YoY, exceeded the previous month’s and forecast. This was attributable to the economic recovery further boosted the household consumption, fixed investment and government spending.

Domestic Market Update
• The 10-year rupiah denominated government bond yield rose 1 bps to 6.04% on Friday (11/12/21). This is in line with our daily forecast range of 6.00%-6.10%.
• Lack of external pressure has boosted Indo GB price. Based on our model, the 10- year Indo GB yield was 10 bps lower than its -1STD fair yield.

• 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 appreciated against at USD to IDR 14,219/USD as of Friday last week. Meanwhile 5-year Indo CDS rose to 84.56 bps at the same time.

Market Projection
• Indonesia’s Oct-21 international trade data is set to be announced this morning. We projected exports and to jump +43.94% YoY/+57.26% YoY respectively translating into a surplus of USD3.71bn in trade balance.
• 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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