Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian bonds came under heavy pressure, with a sharp bear flattening in the 5Y–10Y segment as the 5Y yield (FR104) surged +21.9 bps to 6.69% and the 10Y yield (FR0108) climbed +13.5 bps to 6.89%, narrowing the spread by -8.4 bps, while INDOBeX fell 0.32%. The sell-off was driven by a deteriorating macro backdrop, as the US signaled it will maintain its naval blockade on Iran to pressure oil exports, with Tehran refusing to negotiate under current conditions, raising the risk of supply disruptions as storage constraints could force output cuts. Domestically, pressure on the rupiah intensified, weakening to a record low of 17,330/USD amid elevated oil prices (Brent >USD111/bbl), heightening concerns over fiscal and external balances, even as modest foreign inflows into bonds provided some support. In the US, money supply (M2) remained elevated at USD22.44tn, close to recent highs, pointing to still-ample liquidity conditions. Meanwhile, auction dynamics softened, with SRBI issuance moderating and bid-cover declining to 1.0x alongside higher yields, while SVBI demand also eased slightly, reflecting more cautious investor appetite.