Company Update

22 Oktober 2021

Fixed Income Report - October 22, 2021

Global Market Update

• The 10-year U.S. treasury yield rose nearly 2 bps to 1.70% on Thursday (10/21/21). Overall U.S. treasury yields have increased 1-8 bps along the curve.
• At the same time, U.S. stock market varied with DJI closed 0.02% lower while S&P 500 and Nasdaq Composite nudged up 0.30% and 0.62% respectively.
• U.S Labor Department reported 290,000 initial jobless claims as of Oct 16. The figure was lower than consensus forecast at 300,000.
• U.S. 4-week average initial jobless claims came lower to 319,750 compared to previous period which stood at 335,000.
• Stronger than expected job data pushed U.S. treasury yield to climb higher last night.
• Existing home sales in the US unexpectedly jumped 7% to a seasonally adjusted annual rate of 6.29 million units in September-21, the strongest level in 8 months.
• On the other side, the Fed is expected to hold a meeting on November 2-3 and expected to give a further detail on tapering.
• With asset purchase reduction by USD15bn per month, tapering would be concluded in the second half of 2022 if it will take an effect by mid-November or mid-December.
• Yields for government bond in U.K and Europe also came higher following an increase in U.S. treasury yields, despite a slump in flash consumer confidence reading that declined to -4.80 in October-21.

Domestic Market Update
• The 10-year Indo GB closed flat to 6.06% on Thursday (10/21/21). The benchmark yield was still below our forecast range of 6.10%-6.20%.
• Despite rising U.S. treasury yield recently, the benchmark of local currency denominated government bond to stay flattish.
• Rupiah depreciated against USD to IDR 14.123/USD on Thursday. However 5-year Indonesia CDS remained stable at 83 bps indicating lower external pressure.
• It seemed that investors tend to wait and see digesting both global and domestic development.
• We already witnessed that from the pandemic side, national daily cases of Covid19 has consistently reported below 1,000. Along with declining daily cases, the total active cases also dropped signaling a positive development.
• Meanwhile in the credit market, the value of loans in Indonesia increased 2.21% YoY in September-21 according to BI. Loan disbursement gradually increased on the back of improving domestic pandemic condition.

Market Projection
• We expect the 10 year Indo GB yield to consolidate and moving within range of 6.10% - 6.20% today.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0064, FR0071, FR0078, FR0087, FR0091, FR0080, FR0062 and FR0092.


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