Daily Commentary (1-Nov)

INDOGB continued its rally in the first day of November. All the benchmark bond series were up, sending bond yields to continue going lower. On Monday the 5yr FR63 was traded at 90.3 (+0.6%), yielding 8.23% (-15.9 bps); the 10yr FR64 at 85(+1.1%), yielding 8.44% (-15 bps); the 15yr FR65 at 82.9 (+0.7%), yielding 8.72% (-7.8 bps); and the 20yr FR75 at 87.1 (1.1%), yielding 8.9% (-11.8 bps).

According to PLTE data, foreign has kept posting net buy of Rp1.7n, – coming from non-benchmark series (+Rp1.8tn). Foreign ownership in government bond based on settlement date as of 30-Oct (reflecting trading on 26-Oct) was at Rp863.7tn (inflow of Rp12.8tn mtd or +Rp27.5tn ytd) or 37% of total outstanding.

JCI was also up 0.1% to 5,835.9 (-8.2% ytd) with foreign investors also reported at net inflow of Rp1.2tn (still outflow of Rp53.4 tn ytd). Rupiah also appreciated by 0.49% to Rp15,128/USD (depreciated 11.5% ytd) on Thursday.

BPS released Oct 2018 inflation at 0.28% mom (vs. deflation of 0.18% in Sept and 0.19% market expectation). On yearly basis, the headline inflation rate rose by 3.16% yoy (vs. 2.88% in the previous month and 3.06% yoy market expectation). This was mainly as a result of higher food stuffs price, which was reported rising by 4.38% yoy. Thus, ytd inflation rate was 2.22% (vs. 2.67% and 2.11% in the same period in 2017 and 2016). This is still in line with our view that inflation this year might still be below BI’s mid-range target of 3.5%.

The US Stock rallied for the third straight day. The Dow Jones surged 265 points or 1.1% to 25,381. The S&P 500 soared 29 points or 1.1% to 2,740. The Nasdaq jumped 128 points or 1.8% to 743. The US Treasury prices also ticked higher to push the two-year yield down 4 bps to 2.84% and the 10-year yield down 2 bps to 3.14%.

Meanwhile, the US WTI December crude oil tumbled 2.5% to settle at a seven-month low of USD 63.69/bbl. DXY index also dropped 0.9% to 96.3. All this condition might support INDOGB to rally further. (Source: Mandiri Sekuritas)


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