Domestic Economy Improves, Bond Real Returns Narrow. The Central Statistics Agency (BPS) recorded Indonesia’s inflation rate for October 2020 at 0.07% MoM. These data simultaneously end deflation for three consecutive months, indicating that Indonesia’s domestic economy is starting to improve. This figure is in line with market expectations in the 0.075% range. Meanwhile, calendar year inflation was 0.95 %% YtD and annual inflation was 1.44 %% YoY. On the other hand, the actual inflation reduces the real return on bond yields, causing all benchmark series Government Securities (SUN) to record yesterday’s price decline. In addition, pressure on benchmark SUN prices after last week’s trading was only open for two days.

CIMB Niaga Pays Off Principal and Bond Interest. Bank CIMB Niaga Tbk (BNGA) repaid bonds principal and interest amounting to IDR 669.31 billion. The bond repayment fund comes from the company’s internal cash. The bonds that are repaid are the Continuous Bonds II of Bank CIMB Niaga Phase III Year 2017 Series B worth IDR 657 billion. These bonds will mature on November 2, 2020. The bonds repaid consist of principal bonds amounting to IDR 657 billion and bond interest of IDR 12.31 billion. Previously, the company had also paid off several maturing debt securities. The bonds are Continuous Sukuk Mudharabah I Bank CIMB Niaga Phase II Year 2019 Series A which will mature on August 31, 2020. The company repays the debt securities on time with details of the principal amount of sukuk amounting to Rp 635 billion and a sukuk profit sharing of Rp 12.52 billion. (Investor Daily)

October inflation was recorded at 0.07%. The Central Statistics Agency (BPS) recorded October inflation at 0.07% on a monthly basis, with annual inflation at 1.44%. When calculated throughout the year, calendar year inflation was recorded at 0.95%. The Head of BPS said that inflation in October 2020 when viewed annually was an increase compared to September 2020 which amounted to 1.42%. But, if compared to October 2019, October 2020 inflation is still lower, he explained Monday (2/11). In addition, inflation in October 2020 was driven by increases in the prices of several commodities. Such as red chilies with a share of inflation of 0.09% mom, shallots with a share of 0.02%, and cooking oil with a share of 0.09%. (Kontan)

Real Return Pressure and the Waiting for Indonesian GDP 3Q20. Inflationary sentiment will still color the bond market today. October inflation at the same time ended deflation for three consecutive months. On the other hand, inflation will reduce bond real returns amid the current low yield of Government Securities (SBN). Currently, market players are also looking forward to data on Indonesia’s economic growth for the 3Q20 period, up to the presidential election (pilpres) of the United States (US). Indonesia’s 3Q20 Gross Domestic Product (GDP) data will provide an overview of the trend of domestic economic recovery. In the short term, investors can look at FR0081, FR0082, FR0086, and FR0087. Yesterday, the rupiah exchange rate weakened 0.10% to IDR 14,640 / USD on the spot market. Meanwhile, BI’s middle rate weakened 0.19% to IDR 14,718 / USD.

-REVIEW (Nov. 2, 2020)-
FR0081 (5yr): +1.5 Bps to 104.11 (5.47%)
FR0082 (10yr): +0.2 Bps to 102.96 (6.58%)
FR0080 (15yr): +0.2 Bps to 103.12 (7.15%)
FR0083 (20yr): +0.5 Bps to 102.61 (7.24%)

FR0086 (6yr): +1.4 Bps to 99.77 (5.54%)
FR0087 (11yr): +1.1 Bps to 99.22 (6.60%)

UST 2yr: +0.002 point to 0.15%
UST 5yr: -0.009 point to 0.37%
UST 10yr: -0.030 point to 0.84%
UST 30yr: -0.044 point to 1.61%
German Bund 10yr: -0.012 point to -0.64%
UK Gilt 10yr: -0.043 point to 0.21%

CDS 2yr: -1.12% to 40.77
CDS 5yr: -1.64% to 97.66
CDS 10yr: -1.01% to 165.48

WTI: +2.84% to USD36.81/Barrel
BRENT: +2.71% to USD38.97/Barrel
Source: Bloomberg