Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian government bonds recovered modestly, with the 5Y yield (FR104) declining 2.7 bps to 7.20% and the 10Y yield (FR0108) easing 1.6 bps to 7.24%, resulting in a slight steepening of the 5Y–10Y curve by 1.1 bps, while the INDOBeX Composite rose 0.07%. Market sentiment improved after US inflation cooled more than expected in June, with headline CPI slowing to 3.5% YoY from 4.2% and core CPI easing to 2.6% YoY, while headline prices recorded their largest monthly decline since April 2020. Despite the softer inflation data, Fed Chair Kevin Warsh maintained a hawkish stance, emphasizing that the Federal Reserve remains committed to restoring price stability as resilient consumer spending and a healthy labor market continue to support the US economy. Domestically, S&P Global Ratings’ reaffirmation of Indonesia’s BBB sovereign rating with a Stable Outlook helped reinforce investor confidence following June’s bond market selloff, although market participants continued to monitor fiscal execution, rupiah stability, Bank Indonesia’s policy outlook, and global interest rate developments. Meanwhile, the government successfully raised IDR10.0 trillion at its SBSN auction from IDR32.5 trillion in incoming bids, implying a strong 3.25x bid-to-cover ratio, with the newly issued SPNS12042027 and PBS038 attracting the largest allocations. On the credit front, PEFINDO assigned PT Rukun Raharja Tbk (RAJA) an idA+ rating with a Stable Outlook, supported by the company’s strong position in Indonesia’s gas transmission and distribution sector and its solid financial profile.