Last Thursday, the yield on the 10-year US Treasury (UST) rose again to near the 1.6% level. This increase caused the spread of UST yield with the same tenor Government Securities (SUN) to widen again by more than 515 bps. The increase in UST yield occurred due to expectations of US economic recovery and rising inflation. High inflation will reduce the yield return, which in turn makes investment in UST less profitable. As a result, market players released their ownership of UST, and the yield increased. This is also driven by the US government’s policy of disbursing fiscal stimulus worth USD 1.9 trillion, accelerating the US economic recovery and potentially increasing inflation. As a result, UST yields continued to increase. The same thing happened in Indonesia. Last weekend, the yield on the benchmark 10-year SUN FR0087 came to a level of 6.73%.

Since Early 2020, Bonds and Sukuk on the IDX are IDR 14.6 Trillion. Since the beginning of the year until now, the total issuances of bonds and sukuk that have been listed in the Indonesian Stock Exchange (IDX) are 14 issuances from 12 issuers worth IDR 14.6 trillion. On the weekend, Friday (12/03), Sustainable Bonds II Pupuk Indonesia Phase II Year 2021 (Bonds) amounting to IDR 2.750 trillion are listed on the IDX. With this recording, the total issuances of bonds and sukuk on the IDX totaled 475 issuances with an outstanding nominal value of IDR 428.89 trillion and USD 47.5 million and were issued by 130 issuers. Meanwhile, Government Securities (SBN) listed on the IDX totaled 140 series valued at IDR 4,086 trillion and USD 400 million. As for the asset-backed securities (EBA), there were 11 emissions worth Rp 7.25 trillion. (Berita Satu)

Tax Expenditures for 2020 Worth IDR 228 Trillion. The Ministry of Finance (Kemenkeu) recorded that the realization of tax spending throughout 2020 was IDR 228 trillion. This figure is down by around 11.3% from the 2019 realization of IDR 257.2 trillion. The decline in tax spending last year was in line with the decline in economic activity. One of them is economic service at the level of Micro, Small and Medium Enterprises (MSMEs). This is because tax spending is included in value added tax (VAT) which is not collected by MSME entrepreneurs. This is in accordance with the provisions of the threshold for taxable entrepreneurs (PKP) with a turnover of less than IDR 4.8, who are not obliged to collect VAT. (Kontan)

Import Data and BI 7-DRRR are Sentiment This Week. A number of market players project that imports will grow by more than 11% YoY, or grow higher than exports. However, the trade balance is projected to remain positive at USD 2.1 billion. The market is paying close attention to this data, after the increase in Indonesian imports has never occurred in the last 19 months. The Covid-19 pandemic still limits company operations in Indonesia. Domestic demand will make imports increase. This is a positive signal for domestic economic recovery. On the other hand, investors are also watching the Bank Indonesia (BI) Board of Governors (RDG) Meeting on 17-18 March 2021, which is projected to maintain the BI Seven Days Reverse Repo Rate (BI 7-DRRR) at the level of 3.5%. As for external sentiment, coming from the monthly meeting of the Fed whose results will be announced on March 18, 2021, which is also projected to not change the benchmark interest rate.