Global Market Update
• The 10-year U.S. treasury yield fell 5 bps to 1.45% on Tuesday (11/09/21). U.S. treasury yields dipped 2-6 bps along the curve.
• U.S. stocks market closed at loss last night with DJI dropped 0.31%, S&P 500 edged down 0.35% and Nasdaq Composite decreased 0.60%.
• A rise in U.S. producer price index (PPI) of 0.6% MoM was recorded in Oct-21, wellaligned with the market expectation. On a year-on-year basis, PPI rose 8.6%, slightly lower than the forecast at 8.7%.
• Eurozone’s economic sentiment index came out solid in Nov-21, as it increased to 25.9.
• Germany also noted an increase in consumer confidence in Nov-21 to a level of 31.7, from 22.3 in Oct-21. Despite the optimism, current supply bottlenecks and high inflation rate still pose a downside risk.
• Australia business confidence index rose to 21 in Oct-21, 11 points higher than the previous month’s. A significant change could be seen in retail, recreation and financial services which was attributable to the lockdown lifting and rise of vaccination rate.
• Meanwhile, Australia’s restriction easing also worries the citizens on the possibility of higher Covid-19 cases in the future. This portrayed in a fall of its consumer confidence index to -1.5% MoM in Oct-21, below the consensus of 1.5%.
Domestic Market Update
• The 10-year rupiah denominated government bond yield closed flat at 6.02% yesterday. This is in line with our daily forecast range of 6.00%-6.10%.
• Overall Indo GB yields fell 1-3 bps along the curve, in line with the decline in U.S. treasury yields and strengthening rupiah.
• The value of rupiah slightly appreciated against at USD to IDR 14,243/USD yesterday. Meanwhile 5-year Indo CDS rose to 85.02 bps at the same time.
• Indonesia retail sales is expected to pick up in Oct-21 with the index rose by 1.8% MoM after experiencing a contraction in Sep-21. On a year on year basis, Sep-21 domestic retail sales contracted 2.2%. • Looking ahead, easing social restriction will boost domestic retail sales as public mobility to gradually pick up.
• Inflation is expected to rise in Dec-21 driven by its seasonality. However inflationary pressure to remain low and benign in 2021 before gradually increase in 2022.
Market Projection
• Given the decline in U.S. treasury yields and strengthening rupiah, we expect the 10- year Indo GB to follow the suit. However the uptrend potential in government bond price should be limited. The 10-year Indo GB is expected to be traded with yield range of 6.00% - 6.10% today (11/10/21).
• Attractive Indo GB series to be traded today : FR0086, FR0090, FR0071, FR0078, FR0087, FR0091, FR0068, FR0088, FR0083 and FR0092.
Disclaimer
