Global Market Update
• The 10-year U.S treasury yield slightly rose to 1.48% last night. Overall U.S. treasury yields increased by 1-3 bps along the curve.
• Markets eye on U.S. Non-Farm Payroll (NFP) data that due this week. Consensus estimated there were 475,000 jobs created last month.
• In addition, dispute over U.S debt ceiling continues with the President Biden calling for Republicans to join Democrats in voting to raise it in the next two weeks.
• Euro zone bond yields inched higher following U.S treasury notes movement.
• The benchmark 10 year government bond yields in U.K and Germany closed 1 bps higher from previous trading session.
• Energy prices remained stubbornly rising with oil price hovering at USD80/bbl, Newcastle coal price hitting another all time high above USD200/ton.
• Rising energy prices across the board was driven by supply concerns as OPEC+ stood to gradually increase production while coal stockpiles in more than 100 power plants in India can only be utilized less than 10 days.
• Soaring energy prices has forced inflationary pressure to stay high amid continuing economic recovery.
• Despite rally in the commodity markets. U.S. equity tumbled last night. DJI dropped 0.94%, S&P 500 ended 1.30% lower while at the same time tech heavy Nasdaq lead the depreciation after declining by 2.14%.
Domestic Market Update
• The 10 year Indo GB stayed at 6.2% despite rising risk premium. However, the benchmark yield was still in our forecast range of 6.15%-6.25%.
• The 5-year Indo CDS increased by to a more than 83 bps yesterday. Rupiah gained its strength to IDR 14.267/USD in the spot market.
• The government issues a new retail bond ORI020 with a coupon of 4.95%. This 3-year bond which will mature on October 15, 2024 will be offered on October 4- 21, 2021.
• In our view this bond is attractive since the coupon is higher than average banks deposit while at the same time offering safer asset for investors.
Market Projection
• Government will conduct Sukuk Negara Auction today with lower indicative target of IDR5tn. he indicative target set for today's auction is lower than in the previous auction on the back of positive trend in government revenues.
• As of Aug 31, total government revenue has reached IDR1,177.6tn or 13.9% higher than the same period last year.
• Furthermore, the total government securities issuance as of September 29 reached IDR1,053tn.
• We expect the 10 year Indo GB yield to stay flattish tend to move within range of 6.15% - 6.25% today.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0082, FR0087, FR0091, FR0068, FR0072, FR0062.
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