Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds were broadly stable, with the 5Y yield (FR104) declining 3.2bps to 6.71% and the 10Y yield (FR0108) falling by the same magnitude to 6.66%, leaving the 5Y–10Y curve unchanged, while the INDOBeX Composite edged up 0.02%. Market sentiment continued to be supported by signs of progress in US-Iran peace negotiations, with President Trump expressing optimism that an agreement could be reached within a week, although discussions remain delicate as Iran pushes for a ceasefire in Lebanon and tensions between Israel and Hezbollah persist. In the US, labor market conditions remained resilient as April job openings rose by 731,000 to 7.62 million, the highest level since November 2024 and well above expectations, reinforcing confidence in underlying economic strength despite elevated energy prices. Domestically, Indonesia’s inflation accelerated to 3.08% YoY in May from 2.42% previously, driven mainly by higher food prices, while core inflation also edged up to 2.59%, suggesting firmer underlying price pressures. At the same time, the trade surplus narrowed sharply to just USD0.09bn, its smallest level since 2020. In the primary market, the latest SBSN auction raised IDR8.85tn from incoming bids of IDR26.0tn, below the government’s IDR12tn indicative target. On the credit front, Fitch affirmed ARTO’s A-(idn) rating with a Stable Outlook, supported by its expanding digital banking franchise and improving profitability prospects, while SMII plans to repay its upcoming bond and sukuk maturities using internal funds backed by a strong liquidity position.