Market Brief
Indonesia’s local-currency bond market posted mixed performance yesterday, with government yields moving within a relatively tight 1–6 bps range across the curve. The 10-year benchmark yield edged 2 bps higher to 6.30%. The Rupiah strengthened modestly to IDR16,625/USD, appreciating from IDR16,663/USD the previous day. Secondary-market activity showed a notable improvement, as outright government securities turnover increased to IDR26.7 trillion from IDR14.0 trillion, while corporate bond trading volume rose to IDR2.6 trillion. In the offshore market, Indonesia’s USD-denominated sovereign bonds also saw marginal yield increases, with the Indo-30, Indo-35, and Indo-54 closing at 4.25% (+1 bps), 4.90% (+1 bps), and 5.34% (+1 bps), respectively.
U.S. Treasury markets traded in a narrow band last night, with the 10-year yield finishing essentially unchanged as investors positioned ahead of next week’s final FOMC meeting of the year. Market pricing now reflects a sharply rising conviction in a quarter-point rate cut, with futures assigning an 89% probability of easing—up from roughly 35% several weeks ago—driven by softer macroeconomic data and expectations of a gradual shift toward a more accommodative policy stance. With FOMC participants in the pre-meeting communications blackout, investor focus turned to the incoming data flow, including the ADP employment report, weekly jobless claims, the delayed PCE inflation release, October durable goods orders, factory orders, and the University of Michigan consumer sentiment survey. These indicators will help refine expectations for the pace and timing of rate cuts through 2025. U.S. Treasury market also hovered around the flatline as corporate issuance remained elevated—USD15.8 billion priced Monday, against USD20 billion estimated for the entire week. Markets also digested reports pointing to the potential appointment of a more dovish Federal Reserve Chair next year, with President Trump expected to announce his nominee in early 2026 and Kevin Hassett viewed as a leading candidate. The interplay of heightened policy uncertainty, a data-heavy calendar, and pre-FOMC positioning left yields relatively stable into the close. The 2-year, 5-year, 10-year, and 30-year U.S. Treasury yields ended at 3.51% (-2 bps), 3.66% (-1 bps), 4.09% (unchanged), and 4.74% (unchanged). European sovereign markets were similarly muted, with 10-year yields in Germany, the UK, and France closing at 2.75% (unchanged), 4.47% (-1 bps), and 3.49% (+1 bps), respectively.
Indonesia’s government bond yields are expected to hover near current levels in the absence of new external catalysts, mirroring the stability observed in U.S. and European bond markets. A more cautious investor stance—reflected in weaker participation in yesterday’s government bond auction—may also limit near-term yield movement. Total incoming bids reached IDR69.6 trillion, below both the previous auction’s IDR78.9 trillion and the 22-auction average of IDR92.0 trillion, suggesting softer demand at the margin.
Fixed Income News
• The Government of Indonesia successfully raised IDR25.0 trillion in yesterday’s government bond auction, exceeding the indicative target of IDR23.0 trillion.
• PT TBS Energi Utama Tbk (TOBA) received an idA(sy) rating from PEFINDO for its IDR448.5 billion Sukuk Wakalah II Year 2025.
