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Company Update

17 November 2021

Fixed Income Report - November 17, 2021

Global Market Update

• The 10-year U.S. treasury yield inched 2 bps higher to 1.63% on Tuesday (11/16/21). There was no significant changes recorded along the curve of U.S. treasury yields.
• U.S. stocks market rebounded last night with DJI up 0.15%, S&P 500 added 0.39% and Nasdaq Composite jumped 0.76%.
• U.S. retail sales grew +1.7% MoM/+16.3% YoY in Oct-21, higher than the previous month of +0.7% MoM/+14.3% YoY.

• U.S. NAHB housing market index grew to 83, higher than both previous month’s and market estimate of 80. This shows how strong demand remained amid surging house prices.
• U.K unemployment rate fell to 4.3% in Sep-21, slightly below the consensus of 4.4% indicating the country’s economic recovery post Covid-19 pandemic.
• The preliminary reading estimated a hike in Eurozone’s number of employment to 0.9% QoQ and 2% YoY in 3Q21, following the rise in employment rate across France, Spain, Italy and Germany.
• Despite the inflationary pressures and increasing of Covid-19 cases in some countries, the advanced reading in Euro Area’s GDP growth rate expected a rise by 2.2% QoQ and 3.7% YoY in 3Q21, well-aligned with the market forecast.

Domestic Market Update
• The 10-year rupiah denominated government bond yield fell 1 bps to 6.02% yesterday (11/16/21). 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 slightly depreciated against at USD to IDR 14,222/USD. Meanwhile 5-year Indo CDS dropped to 82.92 bps at the same time.
• As of Sep21, banks deposit reached IDR7,244tn according to Deposit Insurance Agency (LPS). Time Deposit still dominated banking third party fund which accounted for 39.45% and followed by savings and current accounts, which contributed 31.73% and 27.92%, respectively.
• Despite the structure of TPF in Indonesia's banking system remained dominated by TD, the growth in saving accounts combined with significantly lower TD rates help CoF to lower even amid the declining loan yield. We expect with this trend, banking NIM to improve in 4Q21.

Market Projection
• We expect the 10-year Indo GB yield to move within range of 6.00-6.10% today on the back of lack external pressure and rupiah stability.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0088, FR0083 and FR0092.

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