Global Market Update
• The 10-year U.S. treasury yield dropped 8 bps to a level of 1.55% on Wednesday (10/27/21). U.S. treasury yields fell by 2-10 bps along the curve.
• The fall in yields noted as a result of Bank of Canada’s decision to join other central banks, such as Bank of England, in ending its quantitative easing programme yesterday.
• U.S. stocks market closed mixed last night. No changes on Nasdaq Composite despite DJI and S&P 500 slipped 0.74% and 0.51% respectively.
• New orders for U.S. durable goods decreased 0.4% MoM in Sep-21 from 1.3% in Aug-21, driven by the ongoing supply chain disruptions.
• Bank of Canada announced its target overnight rate maintained at 0.25%. An earlier hike rate is signalled to anticipate CPI inflation, resulted from higher energy prices and supply bottlenecks in pandemic era.
• The GfK Consumer Climate in Germany climbed 0.5 points from previous month’s to 0.9 into Nov-21. This hike was attributable to the German’s expectation of a higher inflation rate to occur.
• France’s consumer confidence dropped to 99 in Oct-21, 2 points lower than both consensus and September’s figure of 101.
• Australia’s annual inflation rate declined to a level of 3.0% in 3Q21, below the consensus of 3.1%.
Domestic Market Update
• The 10-year Indo GB yield stayed flat. As of Wednesday (10/27/21), the benchmark government bond yield closed at 6.00%. This is in line with our daily forecast range of 5.95%-6.05%.
• The value of rupiah depreciated against USD to IDR 14,173/USD yesterday. Meanwhile 5-year Indo CDS dropped more than 5 bps to 76.13 bps.
• BI said that the 10-year U.S. treasury yield may rise gradually to 2.0-2.5% in 2022. BI said that domestic central bank will strengthen stabilization policy to anticipate the potential outflows during monetary tightening period.
• On the macro side, as of Sep-21 credit in Indonesia grew 3.2% and is expected to reach 4-5% this year. Bank's NPL was at 3.22% and restructured loans value decreased to IDR738.6tn according to OJK.
• Overall, credit condition in Indonesia keeps improving. We believe that with the decline in NPL and restructured loans values, banking provisioning to decrease, therefore improving banks profitability.
Market Projection
• We expect the 10 year Indo GB yield to decline to a range of 5.95% - 6.05% on Thursday (10/28/21).
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0082, FR0087, FR0091, FR0068, FR0080, FR0088, FR0050, FR0083 and FR0092.
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