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Company Update

24 September 2021

Fixed Income Report - September 24, 2021

Global Market Update

• The U.S. treasury yield climbed to a two month high after the Fed said they may soon start the bond tapering.
• The 10 year U.S. treasury yield jumped 10 bps to 1.43% while yield for 30 year U.S. treasury bond rose 9 bps to 1.94%.
• The Fed said that U.S. economy has made a substantial progress since the depths of the pandemic, therefore the central bank may be able to slow the pace of asset purchase.
• Weekly jobless claims for the week ended September 18, totaled 351,000 or higher than consensus estimate of 320,000.
• The U.S. stock market jumped more than 1% for all 3 indices last night with DJI rose by 1.48% and lead the appreciation while S&P 500 and Nasdaq Composite increased by 1.21% and 1.04% respectively.
• Bank of England (BoE) decided to keep the interest rate unchanged and maintaining its asset purchase target of GBP875bn (USD1.2tn).
• Elsewhere, Norges Bank reported to be the first Western central bank to tighten its monetary policy by rising the interest rate. The Norwegian central bank decided to raise interest rate to 0.25% from 0%.

Domestic Market Update
• The 10 year Indo GB yield declined to 6.11% on Thursday (09/23/21) and remained within our forecast range of 6.10%-6.20% so far.
• 5 year Indo CDS declined to below 80 bps while rupiah was stable at IDR 14,243/USD.
• As of Aug-21 government financing program through securities issuance (SBN) reached IDR567.4tn or equivalent to 47% from the budget target. The value of government securities issuance decreased by 15.5% YoY.
• The adjustment in government securities issuance affected by 1) government budget reallocation and refocusing program; 2) burden sharing scheme between BI and government and also 3) budget deficit projection.

Market Projection
• We expect the 10 year Indo GB yield to rise and moving within range of 6.15% - 6.25% today on the back of rising U.S. treasury yield and monetary policy normalization that have already started globally.
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0082, FR0087, FR0091, FR0088, FR0050.

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