INDON Curve Flattens Ahead Of BI Decision, Foreign Investors Sell Bonds

The Indonesian sov curve is slightly flatter today with yields are 1-3bps lower. Focus is on the BI rate decision later today, while consensus expects no change in rates over a quarter of analysts surveyed by Bloomberg expect at 25bp hike due to recent currency weakness, with the IDR falling nearly 5.2% against the dollar so far this year.

• The INDON sov curve is flatter today, the 2Y yield is 1bp lower at 5.275%, 5Y yield is 1.5bps lower at 5.31%, the 10Y yield is 2bps lower at 5.42%, while the 5-year CDS is down 1bps at 77bps.
• The INDON to UST spread diff has widen in the front-end overnight as the treasury curve bear-steepened, the 2Y is now 35bps (+4bps), 5yr is 66bps (unchanged), while the 10yr is 80bps (-2.5bps)
• In cross-asset moves, the USD/IDR is down 0.42% at 16,152, the JCI is 0.81% higher, Palm Oil is up 0.15%, while US Tsys yields are 1-2bps higher
• Foreign Investors continue to offload Indonesian debt with selling momentum picking up in the short-term the past 6 trading days have seen a total of $632m of outflows, with the 5-day average is now -$100m, vs the 20-day average at -$70m, while the 100 & 200-day averages are about -$5m.
• Bank Indonesia (BI) meets today and while consensus expects no change in rates over a quarter of analysts surveyed by Bloomberg expect at 25bp hike due to recent currency weakness. Apart from the rupiah, there has been some attention on inflation developments in March, but we believe that BI will look through the tick up in headline and its inflation assessment will be unchanged. See MNI's BI preview here.