Full Report:
EN : bit.ly/FIMF20260707en
IN : bit.ly/FIMF20260707in
Market Brief
Indonesia’s local-currency government bond market traded sideways yesterday, with yields moving within a narrow 1–3 bps range across the curve. The benchmark 10-year yield edged lower by 1 bp to 7.13%. Secondary market activity was relatively stable, as outright transaction volume in government securities rose slightly to IDR19.2 trillion from IDR19.1 trillion in the previous session. Meanwhile, corporate bond trading volume totalled IDR8.5 trillion. On the currency front, the Rupiah depreciated to IDR17,996/USD from IDR17,963/USD previously. Indonesia’s USD-denominated sovereign bonds closed on a stronger note, with yields on INDO-31, INDO-34, and INDO-54 declining to 4.83% (-2 bps), 5.15% (-2 bps), and 5.73% (-1 bp), respectively.
U.S. Treasury yields moved modestly lower as investors returned from the Independence Day holiday and digested softer U.S. economic data, while awaiting the release of the June FOMC minutes later this week for further guidance on the Fed’s policy outlook. The 2Y, 5Y, 10Y, and 30Y yields closed at 4.11% (-3 bps), 4.20% (-3 bps), 4.49% (-2 bps), and 4.99% (unchanged), respectively. In contrast, European sovereign bond yields edged higher, with 10-year yields closing at 2.95% (+2 bps) in Germany, 4.79% (+1 bp) in the UK, and 3.73% (+1 bp) in France. The latest U.S. activity data pointed to continued expansion, albeit at a more moderate pace. The ISM Services PMI eased to 54.0 in June from 54.5 in May, slightly below the 54.2 consensus estimate, indicating that services activity remained in expansionary territory but continued to lose some momentum. Meanwhile, the S&P Global Services PMI was finalized at 51.2, marginally below the flash estimate of 51.3 but higher than 50.7 in May, suggesting steady but moderating growth. The softer services data followed last week’s weaker-than-expected June nonfarm payrolls report, which showed job gains of 57,000 versus the 110,000 consensus estimate, reinforcing expectations that the Fed may face less urgency to tighten policy further. Easing energy prices also helped temper inflation concerns, with WTI crude oil remaining below USD69/bbl. Looking ahead, investors will focus on the FOMC meeting minutes, which may provide further insight into policymakers’ assessment of inflation dynamics and the interest rate outlook under Fed Chair Kevin Warsh. Markets will also monitor upcoming initial jobless claims and existing home sales data for additional signals on the resilience of the U.S. economy.
Indonesia’s bond market is likely to trade with a slightly stronger bias in the near term, supported by easing U.S. Treasury yields and softer expectations for additional Fed tightening following recent weaker U.S. economic data. Domestically, attention will turn to today’s government bond auction, where investor demand will be closely watched as a gauge of appetite after local yields stabilized around current levels. A healthy bidding outcome could provide additional support to market sentiment.
Fixed Income News
• The Government of Indonesia is scheduled to conduct a SUN auction today, with an indicative issuance target of IDR32.0 trillion.
• PT Sarana Multigriya Finansial (SMF) plans to issue Shelf Registration Bond VIII Phase III 2026 and Shelf Registration Social Bond II Phase II 2026, with each issuance targeting proceeds of up to IDR1.0 trillion.
