The Bank of Japan (BOJ) announced its decision to relax its yield curve control (YCC) policy yesterday (10/31), which led to a 10Y JGB yield hike of 6 bps to 0.95%, followed by a 1.7% depreciation of the Japanese Yen to JPY 151.7 per USD. This decision had minimal impact on the US treasury and European bond markets, as reflected by the increase in the 10Y UST yield (4 bps to 4.93%) and the decline in the 10Y Bund yield (-2 bps to 2.81%); the drop in 10Y Bund yield was mainly caused by European domestic factors, including the worse-than-expected drop in Eurozone headline CPI inflation to 2.9% yoy (Sep: 4.3% yoy; Cons: 3.1% yoy) and the -0.1% qoq decline in Eurozone GDP in 3Q23 ( 2Q23: 0.2% qoq; Cons: 0% qoq). The impact of BOJ’s new policy on the SBN market was also relatively minimal, thanks to the euphoria over the sharp increase in demand at SUN auction to IDR 35.9tn (Prev: IDR 17tn; see Fixed Income News). We expect the 10Y INDOGB yield to consolidate at 7.1-7.2% today, while Rupiah might depreciate toward IDR 15,900-16,000 per USD, following the strengthening of USD index (0.5% to 106.7). Fixed Income News:  Ministry of Finance issues IDR 19.3tn worth of new SUN (10/17: IDR 10.2tn), matching the Ministry of Finance's indicative target and far better than our projections (IDR 8-11tn). The strong number was mainly driven by a sharp increase in demand for SUN in the primary market to IDR 35.9tn (10/17: IDR 17tn). The best-selling series during the auction was FR0101 (IDR 10.5tn), with incoming bids of IDR 12.9tn, a candidate for the reference series FR0095 (5-year), which will mature on April 15, 2029, followed by FR0100 (IDR 4.1tn). (DJPPR) Global Economic News: China's official manufacturing PMI fell to 49.5 in October (Sep: & Cons: 50.2). Non-manufacturing PMI also fell to 50.6 (Sep: 51.7; Cons: 51.8). The data has sparked concerns that China's economic slowdown to continue until the end of the year, and massive fiscal stimuli are needed to push the economy back on the right track.. (Caixin)

Domestic Economic News: Pertamina lowers non-subsidized fuel prices. The price of Pertamax (RON 92 was lowered to IDR 13,400 per liter (Prev: IDR 14,000), Pertamax Turbo (RON 98) to IDR 15,500 (Prev: IDR 16,600), Dexlite to IDR 16,950 (Prev: IDR 17,200), DEX to IDR 17,750 (Prev: IDR 17,900) and Pertamax Green (RON 95) to IDR 15,000 (Prev: IDR 16,000). Based on our calculations, the decision to lower non-subsidized fuel prices will help reduce November inflation by -0.002%.(Kontan)

Recommendation: FR0096, FR0097, FR0098, FR0100.