SIMINVEST – Fixed Income Monthly Report – March 2024

In March 2024, the 10 Year US Treasury Yield fluctuated between 4.07% and 4.32%, influenced by revised Non-Farm Payroll figures and unexpected spikes in core inflation and CPI, prompting a cautious approach from the Federal Reserve toward interest rates to balance economic indicators and avoid premature adjustments. Despite these fluctuations, the Fed maintained a dovish stance, projecting a 2.1% GDP growth and indicating three potential rate cuts in 2024. Meanwhile, Indonesia’s inflation rose to 3.05% YoY, surpassing February’s 2.75% and market consensus of 2.91%, driven by increased core inflation and seasonal demand from Ramadan, alongside supply issues due to a prolonged dry season, particularly affecting volatile food prices like chicken, eggs, and garlic. Bank Indonesia maintained its main interest rate at 6% in their March meeting, pursuing a pro-stability monetary policy while anticipating potential Federal Reserve rate cuts in the latter half of 2024, despite elevated inflation and solid US economic growth. Furthermore, sukuk issuance experienced a notable decline compared to previous months, with no issuance recorded during the period, marking a substantial decrease from the 0.5 trillion issuances in the prior month and highlighting a significant contrast from January’s 2.0 trillion issuance. In the corporate bond market, March 2024 witnessed a surge in issuance totaling IDR 10.2 trillion, covering corporate bond maturities for the same period, amounting to 2.8 trillion, although lower compared to the 2023 figure of 17.3%. Financial Institutions led the issuance at 33%, followed by Pulp & Paper at 14%, with PT. Tower Bersama Infrastructure Tbk emerging as the top issuer with a substantial issuance of IDR 2.7 trillion. Additionally, the highest corporate bond maturity in 2024 is scheduled for December, totaling IDR 22.6 trillion, with the average daily transaction volume in March reaching IDR 1.9 trillion, exceeding both the previous year’s volumes and those of February 2024.

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