Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds came under significant pressure, with the 5Y yield (FR104) jumping +15.9 bps to 6.64% and the 10Y yield (FR0108) rising +14.3 bps to 6.72%, resulting in a bear flattening of the 5Y–10Y curve by -1.6 bps, while INDOBeX declined 0.40%. The selloff was followed by a stronger-than-expected US inflation data, as headline CPI accelerated to 3.8% YoY in April, the highest since May 2023, largely due to surging energy prices linked to the Iran conflict and ongoing disruptions around the Strait of Hormuz. Core inflation also surprised to the upside, with shelter, transportation services, and apparel costs contributing to the strongest monthly gain in over a year, reinforcing expectations that the Fed may maintain a cautious stance on policy easing. Domestically, retail sales growth moderated to 3.4% YoY in March, the slowest pace since June 2025, reflecting softer post-festive demand and continued cost pressures, although monthly sales rebounded strongly ahead of Eid festivities. On the credit side, Fitch affirmed PPN’s ‘AAA(idn)’ (stable) rating, supported by its strategic integration within Pertamina Group despite expectations of higher leverage following recent mergers and elevated oil prices. Meanwhile, PASE received an idBBB+ rating with a negative outlook, reflecting strong support from Pertamina Group but also ongoing pressure from weak financials, fleet limitations, and rising fuel cost risks amid geopolitical uncertainty.