Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds posted a modest recovery, with the 5Y yield (FR104) declining 2.9bps to 6.73% and the 10Y yield (FR0108) falling 5.7bps to 6.69%, resulting in a flattening of the 5Y–10Y curve by 2.7bps, while the INDOBeX Composite rose 0.09%. Global attention remained on the Federal Reserve after new Fed Chair Kevin Warsh signaled plans for a potential “regime change” at the central bank, including adjustments to communication strategy, balance sheet policy, and inflation assessment, although major policy shifts will still require broader FOMC support. The Fed’s balance sheet also edged higher to USD6.71tn in early May, reflecting continued liquidity support operations. Domestically, the government clarified that nickel pig iron (NPI) and several refined palm oil derivative products will be exempt from the new centralized export policy, with the scheme initially applying to products such as ferronickel, CPO, RBD palm oil, and RBD olein starting June 1. Meanwhile, Indonesia’s current account deficit widened sharply to USD4.01bn or 1.1% of GDP in Q1 2026 from just USD0.15bn a year earlier, reflecting a narrower trade surplus amid weaker global demand and supply chain disruptions linked to the Middle East conflict, while M2 growth eased slightly to 9.2% YoY in April alongside solid credit growth of 9.4% YoY. In the latest SRBI auction, issuance totaled IDR18.0tn, lower than the previous IDR22.0tn, with the 12-month yield rising to 6.76% and the bid-to-cover ratio softening slightly to 3.03x. On the credit side, Pegadaian (PPGD) plans to repay its upcoming IDR228bn bonds and IDR235bn sukuk maturities due August 2026 using external funding facilities.