Government Debt Securities (SUN) prices strengthened in yesterday’s trading session, driven by improving market sentiment. Based on data from PHEI, the yield on the 5-year SUN benchmark (FR0104) fell by 15 basis points (bps) to 6.33%, and the yield on the 10-year SUN benchmark (FR0103) dropped by 10 bps to 6.70%. Bloomberg data showed that the 10-year SUN yield curve (GIDN10YR) declined by 6 bps to 6.76%. The current 10-year SUN yield curve level remains in line with our estimated range for this week, which is 6.67%–6.87%.
The outright traded transaction volume of Government Securities (SBN) was recorded at Rp34.3 trillion yesterday, higher than the previous day’s volume of Rp24.5 trillion. FR0103 and FR0104 were the two most actively traded series in the secondary market, with transaction volumes of Rp7.9 trillion and Rp6.5 trillion, respectively. Meanwhile, the outright transaction volume of corporate bonds was recorded at Rp4.7 trillion.
Data from DJPPR showed that the total incoming bids at yesterday’s Government Sharia Securities (SBSN) auction reached Rp39.7 trillion, higher than the Rp36.9 trillion recorded in the previous SBSN auction on June 10. From the seven series offered, the Government awarded a total of Rp12 trillion, exceeding the indicative target of Rp8 trillion.
Bloomberg data showed that the Rupiah appreciated by 0.84% against the US Dollar, strengthening from Rp16,492/US$ on Monday to Rp16,354/US$ yesterday.
Bond Market Preview (Wednesday,06/25)
Geopolitical tensions in the Middle East eased slightly after a fragile ceasefire was established between Iran and Israel. Oil prices continued to decline as the conflict situation cooled.
In a meeting with the US Congress, Federal Reserve Chairman Jerome Powell stated that the Fed is not in a position to immediately cut interest rates. Chairman Powell assessed that the economy and labor market conditions remain relatively strong. The Fed has not proceeded with rate cuts in anticipation of rising inflation this year. The tariff policies under the Trump administration are expected to contribute to increased inflationary pressures.
Global indicators signaled a relatively positive sentiment for the bond market, as reflected by the decline in US Treasury (UST) yields and Indonesia’s Credit Default Swap (CDS) levels. The 5-year UST yield dropped by 5 bps to 3.86%, and the 10-year UST yield fell by 4 bps to 4.30%. Meanwhile, Indonesia’s 5-year CDS declined by 5 bps to 78 bps. Over the past seven days, the CDS has moved in a range of 76–83 bps. The decline in CDS indicates a subsiding of investor concerns, particularly those related to the Middle East conflict.
Given the above market conditions, we see the potential for increasing demand for Rupiah-denominated Government Securities. Based on yield curve valuation, the following bonds may be attractive to investors: FR0099, FR0052, FR0096, FR0100.
BNIS Fixed Income Daily Report
