Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds came under significant pressure, with the 5Y yield (FR104) rising 16.1bps to 6.76% and the 10Y yield (FR0108) climbing 8.8bps to 6.76%, resulting in a sharp flattening of the 5Y–10Y curve by 7.3bps, while the INDOBeX Composite declined 0.31%. Market sentiment remained fragile amid ongoing geopolitical uncertainty after Iranian media reported that the US had proposed a temporary waiver on sanctions for Iranian oil exports as part of broader negotiations to reopen the Strait of Hormuz. Although the report briefly eased concerns, tensions stayed elevated following drone attacks targeting the UAE’s Barakah nuclear facility, while President Trump urged Iran to “get moving, FAST” as negotiations remained stalled. Domestically, Indonesian markets saw broad-based weakness as the rupiah weakened to a fresh record low above IDR17,600/USD, while bond yields moved higher amid a global selloff driven by elevated oil prices and inflation concerns. Investor sentiment was further weighed down by concerns surrounding Indonesia’s fiscal position and recent rating outlook downgrades, prompting Bank Indonesia to intensify FX intervention and bond market operations, while Governor Perry Warjiyo reiterated confidence that the rupiah could eventually strengthen toward IDR16,500/USD. In the US, demand for Treasury bills improved in the latest auction, with the 3-month bill bid-to-cover ratio rising to 3.17x and the 6-month tenor increasing to 3.07x, indicating continued investor appetite for short-duration safe-haven assets. On the credit side, PEFINDO assigned INDF an idAA+ rating with stable outlook, supported by its strong market position, diversified operations, and robust financial profile, while SMII fully repaid its IDR1.91tn bonds, leading to the subsequent withdrawal of the rating.