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RESEARCH

Company Update

14 September 2021

Fixed Income Report - September 14, 2021

Global Market Update

• U.S. consumer inflation expectations increased for the 10th straight month to 5.2% in August-21. The reading marked the highest expectation in a more than decade.
• U.S. Consumer Price Index (CPI) data would be released today. CPI is expected to grow 5.3% YoY in August-21.
• So far inflation continuing to run hot, putting central banks response on the eyes of investors.
• Should the inflation to run hot and job reports are solid, the time to start tapering asset purchase would come.
• The 10 year U.S. treasury yield closed lower to 1.33% from 1.34% in the previous trading day.
• Overall yields remained low despite inflation data is still running hot,
• U.S. stock market closed mixed. DJI and S&P 500 recorded an increase of 0.76% and 0.23% while Nasdaq Composite declined by 0.07%.

Domestic Market Update
• Government decided to extend the PPKM leveling implementation in Java & Bali up until September 20, 2021.
• The 10 year Indo GB yield increased by 1 bps 6.15%, in line with our expectation to move within range of 6.10%-6.20%.
• The IDR value against USD also declined to IDR 14,253/USD but the 5 year CDS Indonesia remained stable and below 70 bps.
• Foreign ownership of tradable government securities has increased by IDR4.5tn last week indicating an inflows that support Indo GB price appreciation.

Market Projection
• Government will conduct an auction for government debt securities for 7 series of different maturity with the indicative target set at IDR21-31.5tn today.
• We are still confident that government can reach the target that already set, however we foresee that the incoming bids would not as much as in the previous auction as investors keep an eye on September Fed’s policy meeting.
• We expect the 10 year Indo GB yield to move sideways today within range of 6.10%-6.20%. • Attractive Indo GB series to be traded today : FR0086, FR0078, FR0082, FR0087, FR0068, FR0088 & FR0083.

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