Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian government bonds rebounded, with the 5Y yield (FR104) falling 1.5bps to 7.16% and the 10Y yield (FR0108) declining 5.4bps to 7.20%, resulting in a flattening of the 5Y–10Y curve by 3.9bps, while the INDOBeX Composite gained 0.11%. Market sentiment remained dominated by escalating geopolitical tensions after the US launched a third round of airstrikes targeting Iran’s military infrastructure in response to attacks on commercial shipping. Iran retaliated by declaring the Strait of Hormuz closed “until further notice” and carrying out strikes on US military assets across the Gulf, heightening concerns over global oil supply disruptions and increasing uncertainty across financial markets. Meanwhile, the Federal Reserve’s balance sheet edged up slightly to USD6.736 trillion as of July 9, although it remains significantly below its April 2022 peak, reflecting the continued normalization of monetary conditions. Domestically, Indonesia’s automotive sector maintained its recovery, with wholesale car sales rising 12.0% YoY in June, marking a third consecutive month of growth, while retail sales climbed 19.6% YoY, highlighting resilient consumer demand despite elevated financing costs. Bank Indonesia also allotted IDR15.0 trillion in its latest SRBI auction, with the 12-month yield unchanged at 7.67%, although the bid-to-cover ratio softened to 2.03x, indicating more moderate investor demand. On the credit front, PEFINDO assigned an AA+ financial strength rating with a Stable Outlook to PT Asuransi Kredit Indonesia (Askrindo), supported by its strategic role to the government, strong market position, and solid capitalization.