SIMINVEST – Fixed Income Monthly Report – October 2024

In October 2024, financial markets experienced significant changes across key indicators. The 10-Year US Treasury yield moved upward, starting at 3.72% and reaching 3.92% by month-end, as stronger-than expected labor data tempered investor expectations for Federal Reserve rate cuts pace in 2025. In Indonesia, the 10-Year government bond yield also increased, moving from 6.45% at the start of the month to 6.76%, in line with the global yield uptrend. This movement was mirrored the rise in US Treasury yields and reflected sentiment among investors, expecting slower US rate cuts due to strong labor data released. Bank Indonesia chose to hold the BI Rate steady at 6.00%, focusing on maintaining currency stability and controlling inflation amid external pressures. Indonesia’s corporate bond market saw moderate decline, with new issuances declining by 12.6% year-over-year, amounting to IDR 16.5 trillion in October, which met maturities of IDR 10.6 trillion for the same period. Moreover, the elevated yields dampened some new issuance plans, reflecting a cautious stance among corporations anticipating potentially lower future funding costs. Meanwhile, sukuk issuance expanded significantly, climbing 80.7% compared to the prior year, as demand for sharia-compliant investment vehicles remained strong. These developments highlight the intricate dynamics shaping global and Indonesian markets, driven by economic data, central bank policies, inflation outlooks, and investor sentiment toward both bond and sukuk markets.

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