Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds staged a modest recovery, with the 5Y yield (FR104) declining 3.5bps to 7.13% and the 10Y yield (FR0108) falling 4.5bps to 7.13%, resulting in a slight flattening of the 5Y–10Y curve by 1.0bp, while the INDOBeX Composite edged up 0.03%. Domestically, attention remained on fiscal policy as the government reviewed the budget and beneficiary coverage of President Prabowo’s flagship free meals program, with reports suggesting potential spending cuts of more than USD2 billion as authorities seek greater fiscal efficiency and address governance concerns. Meanwhile, Indonesia confirmed plans to implement the B50 biodiesel mandate, with a transition period beginning in July and full adoption targeted by October 2026, reinforcing the government’s commitment to downstream palm oil development and energy security. In the US, inflationary pressures remained elevated as headline PCE inflation accelerated to 4.1% YoY and core PCE rose to 3.4% YoY in May, while labor market conditions stayed resilient with initial jobless claims falling to a four-week low of 215,000. Meanwhile, Bank Indonesia announced an upcoming SVBI auction with an indicative target of USD500 million across five maturities, as the central bank continues efforts to manage foreign exchange liquidity. On the credit side, PEFINDO assigned PT Pupuk Sriwidjaja Palembang (Pusri) an idAAA rating with a Stable Outlook, supported by its strategic role within the Pupuk Indonesia group, strong market position, and solid financial profile.