January inflation that returned to low, boosted investor interest in bonds. This is because real returns, or the difference between the inflation rate and the bond yields, are widening. Yesterday, the Central Statistics Agency (BPS) released inflation data for January 2021 of 0.26% MoM and annual inflation of 1.55% YoY. This inflation realization was lower than the market projection of 0.35% MoM and annual inflation of 1.65% YoY. The slowdown in the inflation rate this time is more influenced by weak demand than maintained supply. The impact of Covid-19 in early 2021, which has not subsided, still overshadows Indonesia’s domestic economy. This reduces mobility, hampers the economy, and ultimately affects the demands of the community. Meanwhile, the yield on the benchmark 10-year Government Bond (SUN) FR0087 fell to a level of 6.24%.

Sales of SMF Retail Corporate Bonds Are Still Below Expectations. Retail corporate bonds are still a new investment instrument for the people of Indonesia, making sales even less than optimal. This can be seen in the process of offering and selling Sustainable Bonds V Sarana Multigriya Finansial Phase V 2021 owned by Sarana Multigriya Finansial (SMF) which is offered through BRI Danareksa Sekuritas. The offering period for SMF bonds to retail customers has closed on January 21, 2020. Referring to the schedule, the results will only be known on February 3. After obtaining approval from the OJK, the SMF bonds will be offered to institutional customers on February 4-5. (Kontan)

BPS Records January Inflation of 0.26%. Prices of various commodities in January 2021 generally show an increase (inflation). The Central Statistics Agency (BPS) noted, inflation in January 2021 was 0.26% MoM and an annualized 1.55% YoY. Despite recording inflation, inflation in January 2021 was lower than inflation in December 2020 at 0.45% MoM and on an annual basis at 1.68% YoY. This pandemic has reduced people’s mobility and the economy is moving slowly. This in turn has an effect on decreasing income which results in weak demand. (Kontan)

Auction Holds Strengthening of SUN. Market players still tend to be selective, both in the primary market or auction as well as the secondary market. Investors are still watching the increase in positive cases of Covid-19 and it has the potential to hinder economic growth this year. Since last week, the number of positive cases of Covid-19 has reached more than 1 million cases. Previously, the International Monetary Fund (IMF) had projected that the rate of Indonesia’s economy would grow by 4.8%, or lower than the government’s target of around 5%. Meanwhile, today’s SUN auction is expected to attract around IDR 60 trillion to IDR 70 trillion bid from investors, with a 10-year benchmark yield ranging from 6.20% – 6.35%.