Global Market Update
• The 10-year U.S. treasury yield strengthened to 1.58% on Thursday (10/28/21), a 4 bps higher than previous day’s figure of 1.53%. U.S. treasury yields rose 1-5 bps along the curve.
• U.S. treasury yields rose despite slower than expected advance reading in 3Q21 GDP growth.
• U.S. stocks market closed at gain last night with DJI and S&P 500 rose 0.68% and 0.98% respectively. Nasdaq Composite jumped 1.39%.
• U.S. GDP growth annualized rate decelerated to 2% QoQ in 3Q21, significantly lower than second quarter’s figure of 6.7%. This slowdown was attributable to the deceleration of government stimulus, surging Covid-19 cases and global supply chain bottlenecks.
• However, the U.S. Department of Labour noted a fall in weekly jobless claims to a seasonally adjusted basis of 281,000 implying a 3.4% below the previous week’s and marked as the new pandemic low.
• ECB decided to hold key interest rates unchanged upon rising inflationary pressures and followed by an increase of Euro zone bond yields.
• The preliminary reading of Germany’s inflation rate recorded a rise to 4.5% YoY in Oct-21, slightly above the consensus of 4.4% hitting 28-year high.
• The Bank of Japan (BoJ) announced its interest rate remains unchanged at - 0.1%, in line with the market forecast.
Domestic Market Update
• As of Thursday (10/28/21), the 10-year rupiah denominated government bond yield closed at 6.01%. This is in line with our daily forecast range of 5.95%- 6.05%.
• The value of rupiah stayed flat against USD to IDR 14,173/USD yesterday. Meanwhile 5-year Indo CDS increased to 79.85 bps.
• Direct investment realization in Indonesia from Jan-Sep 2021 was recorded at IDR659tn, reaching 73.3% from the target of IDR900tn this year. The highest investment realization was reported in housing & real estate sector and base metal industry which accounted for 26% of the total direct investment.
• Overall investment realization grew by 7.8% YoY over the same period of 9 months in 2020. Fiscal stimulus, macroprudential policy relax as well as commodity boom have supported investment flow to housing, real estate and base metal industry. With the brighter outlook in 4Q21, we expect direct investment realization would likely to increase and reaching the 2021 target.
Market Projection
• We expect the 10 year Indo GB yield to move higher with the range of 6.00% - 6.10% on Friday (10/29/21).
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0083 and FR0092.
Disclaimer
