Full Report:
EN : bit.ly\/FIMF20260602en
IN : bit.ly\/FIMF20260602in<\/p>\n\n\n\n
Market Brief<\/p>\n\n\n\n
Indonesia\u2019s local-currency government bonds closed weaker on Friday, with most yields rising by 1\u20137 bps across the curve, while the benchmark 10-year yield increased by 1 bp to 6.72%. Secondary market activity was more subdued, as outright transaction volume in government securities declined to IDR25.7 trillion from IDR36.3 trillion in the previous session. Meanwhile, corporate bond trading volume stood at IDR8.9 trillion. On the currency front, the Rupiah appreciated to IDR17,805\/USD from IDR17,881\/USD previously. Indonesia\u2019s USD-denominated sovereign bonds traded within a narrow range, with yields on INDO-31, INDO-34, and INDO-54 closing at 4.67% (+1 bp), 5.11% (unchanged), and 5.60% (unchanged), respectively.<\/p>\n\n\n\n
U.S. Treasury yields traded within a narrow range, with shorter maturities facing modest pressure as renewed geopolitical tensions offset stronger-than-expected manufacturing data. By the close, the 2-year, 5-year, 10-year, and 30-year Treasury yields settled at 4.03% (+2 bps), 4.17% (+3 bps), 4.45% (+1 bp), and 4.97% (unchanged), respectively, while European sovereign yields moved higher, with 10-year yields rising to 3.00% (+6 bps) in Germany, 4.90% (+9 bps) in the UK, and 3.63% (+8 bps) in France. Treasuries came under renewed selling pressure after reports indicated that Iran had suspended talks with the U.S. following Israeli strikes in Lebanon and was considering a full closure of the Strait of Hormuz. The deterioration in negotiations reignited concerns over global energy supplies, pushing WTI crude nearly 6% higher to USD92\/bbl. Although President Trump later stated that discussions with Iran were continuing and that Israeli military operations in Lebanon would cease, uncertainty surrounding the conflict kept investors cautious.<\/p>\n\n\n\n
Economic data pointed to continued resilience in the manufacturing sector. The ISM Manufacturing Index rose to 54.0 in May (vs. 53.1 consensus and 52.7 previously), while construction spending increased by 0.4% MoM, exceeding expectations of 0.3%. However, the ISM report continued to indicate persistent price pressures alongside contracting employment, reinforcing concerns that inflation could remain elevated even as growth moderates. Market sentiment was also influenced by growing expectations that the Fed may need to keep monetary policy restrictive for longer. The rise in energy prices and the risk of prolonged supply disruptions through the Strait of Hormuz have strengthened inflation concerns, with markets increasingly pricing in the possibility of an additional rate hike later this year. Separately, former Fed Chair Jerome Powell warned that political pressure on the central bank could undermine confidence in its independence.<\/p>\n\n\n\n
In the near term, Indonesia\u2019s government bond market may remain range-bound with a cautious bias this week, as the re-escalation of tensions surrounding the Strait of Hormuz and growing expectations that the Fed could maintain restrictive policy for longer may continue to limit appetite for duration. Attention today will also turn to the sukuk auction, which is targeting IDR12.0 trillion, as investor demand will provide an important gauge of market sentiment. A solid auction outcome could help support the domestic bond market.<\/p>\n\n\n\n
Fixed Income News<\/p>\n\n\n\n
\u2022 The Government of Indonesia is scheduled to hold a sukuk auction today, with an indicative issuance target of IDR12.0 trillion.<\/p>\n\n\n\n
\u2022 PEFINDO has reaffirmed the idAA ratings for PT Medikaloka Hermina Tbk (HEAL) and its Shelf-Registered Bond I Year 2020.<\/p>","protected":false},"excerpt":{"rendered":"
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