Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian government bonds strengthened, with the 5Y yield (FR104) falling 3.8bps to 7.21% and the 10Y yield (FR0108) declining 0.8bps to 7.29%, resulting in a steepening of the 5Y–10Y curve by 3.0bps, while the INDOBeX Composite rose 0.07% to 430.134. Global bond markets remained under pressure as US Treasury yields climbed despite signs of easing inflation, with investors reducing expectations for near-term rate hikes following the Federal Reserve’s decision to maintain its policy rate at 3.50%–3.75%. However, concerns over the Fed’s inflation-fighting credibility persisted, as longer-term yields moved higher despite softer PCE inflation data, reflecting increased term premiums and uncertainty over the future policy path. Meanwhile, Indonesia’s sovereign wealth fund Danantara delayed its planned dollar-denominated bond issuance as elevated US Treasury yields and volatile global bond conditions prompted investors to demand higher yields for its proposed 20-year and 30-year notes. In the currency market, Asian currencies weakened as renewed Middle East tensions boosted safe-haven demand for the US dollar, with the Indonesian rupiah among the region’s weaker performers amid heightened risk aversion. On the credit front, Fitch Ratings upgraded PT Pos Indonesia’s National Long-Term Rating and senior unsecured rating to ‘CC(idn)’ from ‘C(idn)’ after the company settled missed ijarah return installments of IDR24.1 billion within the permitted grace period, although the company remains under significant financial distress due to liquidity constraints and uncertainty over future debt obligations.