Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds extended their selloff, with the 5Y yield (FR104) rising 4.6bps to 6.88% and the 10Y yield (FR0108) climbing 10.2bps to 6.85%, resulting in a steepening of the 5Y–10Y curve by 5.6bps, while the INDOBeX Composite declined 0.39%. Market sentiment remained fragile as investors grew increasingly concerned about Indonesia’s policy direction, with the rupiah weakening beyond IDR18,000/USD and equities falling to their lowest level since the pandemic. Concerns were driven by uncertainty surrounding new commodity export regulations, questions over institutional independence, and rising fiscal risks amid elevated global energy prices. In the US, labor market conditions continued to demonstrate resilience, with nonfarm payrolls increasing by 172,000 in May, well above expectations, while upward revisions to prior months reinforced the view that economic activity remains relatively robust despite tighter financial conditions. Meanwhile, the Federal Reserve’s balance sheet edged higher by USD7.1bn to USD6.71tn, partially reversing recent declines but remaining far below its pandemic-era peak. Domestically, Bank Indonesia awarded IDR30.0tn in the latest SRBI auction, lower than the previous auction’s IDR40.0tn, while the 12-month yield rose to 7.25% and the bid-to-cover ratio improved to 1.65x, indicating stronger investor demand despite higher funding costs.