Company Update

24 November 2021

Fixed Income Report - November 24, 2021

Global Market Update

• The 10-year U.S. treasury yield rose 5 bps to 1.67% on Tuesday (11/23/21). The yields increased following Jerome Powell renomination to be the Fed Chair.
• Market would welcome Powell as the Fed’s chair for the second term and is expected to continue to rollback the monetary stimulus, yet now the decision depends on Senate.
• In addition, pressures to raise the benchmark policy rate has been increasing lately to combat higher and more persistent inflation.
• According to market projection, aggressive FFR hikes with the increase of 50-75 bps is likely in 2022, starting in the early of 2H22.
• U.S. stock market closed varied. DJI and S&P 500 edged higher 0.55% and 0.17% respectively while tech-heavy Nasdaq Composite a decline of 0.50%.
• U.S. manufacturing activity strengthened in Nov-21 as indicated by the flash PMI figure of 59.1 (vs 58.4 in Sep-21).
• The strengthening in manufacturing activity was also seen in Euro Area as the flash PMI figure for Nov-21 was recorded at 58.6 (vs 58.3 in Sep-21).
• In UK, Nov-21 manufacturing PMI flash reading stood at 58.2 higher than the previous month at 57.8.
• Elsewhere in Asia, South Korean consumer sentiment index rose 0.8 point to 107.6 in Nov-21 marking the highest figure since June and marking the third consecutive monthly increase.

Domestic Market Update
• The 10-year Indo GB slightly inched up to 6.04% on Tuesday (11/23/21) but still in line with our forecast range of 6.00-6.10%.
• Even with more volatile trade of U.S. treasury note, the Indo GB yields moved sideways.
• The value of Rupiah against USD marginally depreciated to IDR14,258/USD yesterday. Meanwhile, 5-year Indo CDS fell to a level of 78.22 bps.
• Global Credit Rating Agency (CRA) Fitch Ratings has affirmed Indonesia's LongTerm Foreign-Currency Issuer Default Rating (IDR) at 'BBB' with a Stable Outlook.
• We noted that improving economic outlook in 4Q21 and going forwards is a contributing factor behind rating affirmation.
• Indonesia broad money (M2) supply rose 10.45% YoY in Oct-21, higher than the previous month figure of 8.2% YoY.

Market Projection
• Given the rise in U.S. treasury yields, we expect the 10-year Indo GB yield to edge higher yet to remain within range of 6.00 - 6.10% today.
• Attractive Indo GB series to be traded today: FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR088, FR0083 and FR0092.


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