Market Brief
Indonesia’s local-currency government bond market traded broadly sideways yesterday, with yields shifting within a narrow 1–2 bp range across the curve. The benchmark 10-year yield closed unchanged at 6.10%. In the foreign exchange market, the Rupiah softened modestly, ending the day at IDR16,780/USD versus IDR16,758/USD previously. Secondary market activity moderated, with outright government securities turnover declining to IDR20.7 trillion yesterday, from IDR37.5 trillion in the prior session, while corporate bond trading totaled IDR1.4 trillion. USD-denominated Indonesian sovereign bonds were also largely stable, with Indo-31, Indo-36, and Indo-54 yields closing at 4.35% (+1 bp), 4.93% (unchanged), and 5.36% (unchanged), respectively.
U.S. Treasuries rallied overnight, with yields declining across most of the curve as a series of softer-than-expected labor-market indicators reinforced expectations for at least two Federal Reserve rate cuts later this year. The rally gained traction during the U.S. morning session after December ADP private payrolls rose by just 41,000, below Bloomberg consensus of 50,000, marking only a partial recovery from the prior month’s contraction. In addition, the JOLTS report showed job openings falling to 7.15 million, the lowest level since late 2024, underscoring a gradual cooling in labor demand consistent with a “low-hiring, low-firing” environment. Longer-dated Treasuries outperformed, supported by lower oil prices, elevated geopolitical uncertainty, and strong global demand for duration following rallies in UK and French government bonds. By contrast, front-end yields were little changed as stronger-than-expected ISM services activity index (54.4 in December versus 52.6 in November) and a rebound in services employment index (52.0 versus 48.9) tempered more aggressive dovish repricing. Markets continue to price a high probability of a policy hold at the upcoming FOMC meeting, with rate expectations increasingly sensitive to incremental labor-market data amid still-contained inflation pressures. Attention now turns to Friday’s nonfarm payrolls report, which investors see as a key test for further labor-market moderation. By the close, 2-year, 5-year, 10-year, and 30-year Treasury yields stood at 3.47% (+1 bp), 3.69% (-2 bps), 4.14% (-3 bps), and 4.82% (-5 bps), respectively. Most European government bonds also extended their rally, with 10-year yields in the UK and France declining to 4.42% (-6 bps) and 3.52% (-3 bps), respectively.
Indonesia’s bond market is expected to remain range-bound in the near term. Persistent uncertainty over the timing and magnitude of Federal Reserve easing is likely to limit the scope for a sustained rally in domestic bond market. At the same time, upward pressure on yields should be constrained by ample system liquidity and strong investor reinvestment flows at the start of the year, suggesting a broadly stable trading environment in the absence of a clear external catalyst.
Fixed Income News
• PT Oki Pulp & Paper Mills (OPPM) is preparing to issue Shelf Registration Bond II OPPM Phase IV 2026 with a target size of IDR2.0 trillion, alongside Shelf Registration Sukuk Mudharabah II OPPM Phase IV 2025 amounting to IDR1.5 trillion.
• PEFINDO has assigned an idA+ rating to PT Summarecon Agung Tbk’s (SMRA) proposed IDR3.0 trillion Shelf-Registered Bond V Year 2025 and affirmed the idA+ corporate rating and outstanding Shelf-Registered Bond IV.
