Fixed Income Daily One Pager Series — Daily Bond Lantern
Indonesian government bonds rallied, with the 5Y yield (FR104) falling 11.1bps to 7.25% and the 10Y yield (FR0108) declining 3.4bps to 7.30%, resulting in a steepening of the 5Y–10Y curve by 7.6bps, while the INDOBeX Composite gained 0.13%. Global markets remained focused on the Middle East after the temporary pause in US-Iran hostilities collapsed, with Iran reportedly launching ballistic missiles at US forces, prompting US-Saudi strikes on Iran-backed positions in Iraq and renewing concerns over a broader regional conflict and disruptions to the Strait of Hormuz. Meanwhile, the Federal Reserve left its policy rate unchanged at 3.50%–3.75% for a fifth consecutive meeting, although three FOMC members dissented in favor of a 25bps hike, reinforcing expectations that a September rate increase remains a possibility as inflation continues to run above target despite resilient economic growth. Domestically, the government increased its 2026 biodiesel allocation to 16.75 million kiloliters from 15.65 million kiloliters to support the nationwide B50 mandate, strengthening domestic palm oil demand and advancing Indonesia’s energy security agenda. On the credit front, PEFINDO assigned an idAAA rating with a Stable Outlook to PT Pupuk Kalimantan Timur (PPKT), supported by strong parental backing, a leading market position, and a robust financial profile.