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RESEARCH

Company Update

19 November 2021

Fixed Income Report - November 19, 2021

Global Market Update

• The 10-year U.S. treasury yield remained unchanged at 1.59% on Thursday (11/18/21). U.S. treasury yields dipped 1-3 bps along the curve.
• U.S. stocks market closed mixed last night with DJI decreased 0.17%. Meanwhile, S&P 500 and Nasdaq Composite rose by 0.34% and 0.45% respectively.
• U.S. Initial jobless claims recorded a decline to a level of 268,000 for the week ending of November 13th, still above the consensus estimate at 260,000.
• The 4-weeks moving average U.S. jobless claims in the same period fell to 272,500, below the previous week’s figure of 278,500. Both of this week’s actual result considered as the lowest level since the start of pandemic.
• U.S. Philadelphia Fed Manufacturing Index edged up to 39 in Nov-21, higher than the Oct-21 figure at 23.8.
• South Korea PPI grew +0.8% MoM/+8.9% YoY in Oct-21, above the previous month figure of +0.4% MoM/+7.6% YoY and considered as the highest in the last 13 years.
• Japan’s inflation rate climbed to a level of 0.1% YoY in Oct-21, from 0.2% YoY in the previous month. This was the second consecutive month of Japan CPI to record a positive growth in the last one year period.
• Inflation is now rising globally triggering market expectation of more aggressive monetary policy tightening next year.

Domestic Market Update
• The 10-year Indo GB left unchanged at 6.02% on Thursday (11/18/21), still in line with our projection range of 6.00% - 6.10%.
• The spread between 10-year Indo GB and 10-year U.S. treasury yield stood at 443 bps, remained below 500 bps since the start of 4Q21.
• The value of rupiah appreciated against USD at IDR 14,228/USD. At the same time, 5-year Indo CDS fell to a level of 78.90 bps.
• Bank Indonesia (BI) capped the interest rates unchanged for BI 7 Day Reverse Repo Rate at 3.50%; Lending Facility Rate at 4.25% and Deposit Facility Rate at 2.75% in their November policy meeting, aligned with market projection.
• Indonesia’s loan disbursement rose by 3.24% YoY in Oct-21. The pace of credit expansion in Oct-21 was higher than the previous month’s figure of 2.21% YoY.
• Indonesian banking credit expansion in Oct-21 was primarily driven by the supplydemand improvement in credit market along with gradual easing of social restrictions policy.
• Given the figure above, we believe that loan growth of 4%-6% target for FY21 is achievable.

Market Projection
• We foresee the 10-year Indo GB yield to continue to move sideways within range of 6.00-6.10% today given the lack of external pressures.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0088, FR0083 and FR0092.

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