Market Brief
Indonesia’s local currency bond market remained largely range-bound on Tuesday, with government bond yields shifting narrowly by 1–4 bps across the curve. The 10-year benchmark yield eased by 2 bps to 6.17%. The Rupiah weakened modestly to IDR16,694/ USD from IDR16,654/USD in the previous session. Secondary market activity strengthened notably, as total outright trading volume in government securities surged to IDR31.4 trillion from IDR11.8 trillion a day earlier. Meanwhile, corporate bond trading volume was recorded at IDR1.7 trillion. In the offshore segment, Indonesia’s USD-denominated sovereign bonds also traded sideways, with yields on the Indo-30, Indo-35, and Indo-54 closing at 4.20%, 4.88%, and 5.32%, respectively.
Global bond markets broadly rallied last night as softer macroeconomic indicators from Europe and the U.S. reinforced expectations of impending monetary easing. In Germany, Bund yields declined after the Bundesbank called for renewed fiscal discipline, outlining a three-stage plan to reduce borrowing starting in 2029 while maintaining allocations for defense and infrastructure. The proposal signaled long-term fiscal prudence, tempering demand for additional sovereign issuance. UK gilts strengthened across the curve, led by the front end, following data showing a sharper-than-expected rise in unemployment to 5% alongside weaker wage growth. Market participants consequently priced in an 80% probability of a Bank of England rate cut in December. The British pound weakened as gilt yields fell to their lowest levels since August 2024, underscoring growing expectations that the UK labor market is cooling. In the US, Treasury futures rallied during thin holiday trading after ADP data indicated that private-sector payrolls contracted by an average of 11,250 per week in October, while small business hiring intentions eased. With cash Treasuries closed for Veterans Day, futures prices climbed toward key resistance levels, and rate markets now imply a 67.4% probability of a Federal Reserve rate cut next month. Collectively, the moves reflected a synchronized global bond rally driven by rising confidence that inflationary pressures are receding and that major central banks are preparing to pivot toward easing. The 10-year government bond yields in Germany, the UK, and France fell to 2.66% (-1 bps), 4.39% (-7 bps), and 3.42% (-2 bps), respectively. In the US, yields on the 2-year, 5-year, 10-year, and 30-year Treasury notes stood at 3.59%, 3.71%, 4.12%, and 4.71%, respectively.
Indonesia’s bond market is expected to remain in a consolidation phase in the near term, with participants awaiting further global economic data to assess the likelihood and timing of additional policy rate cuts by major central banks. A more cautious investor stance was evident in yesterday’s sukuk auction, where total incoming bids reached IDR43.4 trillion—lower than IDR51.4 trillion in the prior auction but still comfortably above the year-to-date average of IDR36.0 trillion across the first 20 sukuk auctions in 2025.
Fixed Income News
• The Government of Indonesia successfully raised IDR10.0 trillion in yesterday’s sukuk auction.
• PT Merdeka Battery Materials Tbk (MBMA) plans to issue its Shelf Registration Bond I Phase III Year 2025 with a total offering size of IDR1.5 trillion, alongside the Shelf Registration Sukuk Mudharabah I Phase III Year 2025 valued at IDR500.0 billion.
