Company Update

15 Oktober 2021

Fixed Income Report - October 15, 2021

Global Market Update

• The 10-year U.S. treasury yield slightly lowered to 1.53% on Thursday (10/15/21). However the shorter term of U.S. treasury yields have risen while the long-end tend to decline
• Overall yields on U.S. government bond have declined from a week ago despite the Fed hawkish stance on monetary policy normalization to roll back the emergency induced stimulus.
• U.S. central bank said that economy has made a substantial progress on inflation and job market so that it’s time to start reducing the pace of asset purchase.
• 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.
• U.S. producer price index rose slightly lower than market expectation for September-21 readings. PPI came to increase by only 0.5% on monthly basis compared to 0.6% market consensus.
• U.S. stock market continued to strengthened. All the 3 indexes gained more than 1.5% last night powered by better than expected earnings.
• In U.K and EU countries yield started to normalize following U.S. treasury yields.

Domestic Market Update
• The 10-year Indo GB slipped 4 bps to 6.16% on Thursday (10/14/21). The benchmark yield was still in our forecast range of 6.15%-6.25%.
• The decline in the benchmark local currency government bond yield was in line with lower U.S. treasury yield and also supported by rupiah appreciation.
• Yesterday, rupiah appreciated against USD and came in to below IDR 14.200/USD ahead of September-21 international trade data release that due on Friday (10/15/21).
• At the same time, Indo 5-year CDS also dipped to 92.64 bps. In line with rising government bond price and rupiah, Indonesia stock market also appreciated more than 1% yesterday.

Market Projection
• We projected Indonesia international trade balance to record another round of surplus with exports to jump 47.49% YoY while imports to increase 45.95% YoY causing a positive balance of USD3.70bn.
• We expect the 10 year Indo GB yield to decline and tend to move within range of 6.10% - 6.20% today.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0088 and FR0092.


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