Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian government bonds strengthened modestly, with the 5Y yield (FR104) falling 1.1bps to 7.20% and the 10Y yield (FR0108) easing 0.6bps to 7.28%, resulting in a steepening of the 5Y–10Y curve by 0.5bps, while the INDOBeX Composite gained 0.08%. Global sentiment improved after US President Donald Trump postponed planned military strikes on Iran, citing progress in negotiations to reopen the Strait of Hormuz. The proposed agreement reportedly includes the immediate reopening of the strategic shipping route and measures addressing Iran’s nuclear program, offering hope for a de-escalation in Middle East tensions despite continued security risks involving Iran-backed groups. Domestically, foreign investors returned to Indonesia’s government bond market, with net inflows of USD69.1 million over two sessions helping lift July’s cumulative foreign inflows to USD352.1 million, reflecting improved confidence following Bank Indonesia’s commitment to maintaining rupiah stability. Meanwhile, the Federal Reserve’s balance sheet continued its gradual decline to USD6.74 trillion, reinforcing the ongoing normalization of monetary policy. On the credit front, PEFINDO downgraded PT Adhi Karya (Persero) Tbk (ADHI) to idBB from idA- and placed the rating on CreditWatch with Negative Implications after the company proposed deferring coupon payments, highlighting mounting liquidity pressures and funding challenges.