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RESEARCH

Company Update

14 Oktober 2021

Fixed Income Report - October 14, 2021

Global Market Update

• The 10-year U.S. Treasury yield dipped to 1.54%, meanwhile the yield on 30- year treasury bond dropped more than 5 bps to 2.04% on Wednesday (10/13/21). • U.S. core inflation rose 4.0% YoY as market has expected. However headline CPI rates was 10 bps higher than consensus estimate.
• In September-21, U.S. inflation rate came to rise 5.4% YoY or increasing 0.4% on a monthly basis.
• According to the Fed minutes of meeting, FOMC participants have agreed to roll back emergency support to start either in mid-November or mid-December this year.
• U.S. stock market snapped a 3-day straight losses last night. The broad index of S&P 500 gained 0,30%. At the same time, a tech-heavy Nasdaq Composite rose 0.73%.
• Investors now eye on 3Q21 earnings release that kicked off Wednesday and the downgrade rating action taken by S&P to two Chinese developer larger than Evergrande, Greenland Holdings and E-House.
• Following the drop in U.S. treasury yields, other benchmark government bond yields in Europe and Asia also declined.

Domestic Market Update
• The 10-year Indo GB slipped 2 bps to 6.20% on Wednesday (10/13/21). The benchmark yield was still in our forecast range of 6.20%-6.30%.
• The 5-year Indo CDS stayed flat at 93 bps on Wednesday (10/13/21). Rupiah was also flat against USD to IDR 14.218/USD.
• Bank Indonesia (BI) reported domestic Prompt Manufacturing Index (PMI) in 3Q21 contracted and slipped below the 50-point threshold of expansion to 48.75%.
• The PMI-BI figure was lower than previous quarter reading at 51.45% and central bank forecast at 49.89%.
• The contraction in 3Q21 was driven by the implementation of emergency PPKM that limit economic activities.
• However we expect with the gradual reopening and improving public health conditions, Indonesia's manufacturing activities will likely to rebound in 4Q21 along with other macro indicators such as consumer confidence as well as public mobility.

Market Projection.
• We expect the 10 year Indo GB yield to decline and tend to move within range of 6.15% - 6.25% today.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0088 and FR0092.

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