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INDON Sov Curve Flatter, Trade Surplus Soars, BI Decision Wednesday

INDONESIA
Data BulletEM BulletDataHomepagemarkets-real-timeBulletEmerging Market News

The Indonesian sov curve is flatter today, with the belly of the curve performing the strongest, after weakening last week. Indonesia's trade surplus for march soared, while Bloomberg has changed their view and now sees BI raising rates on Wednesday.

  • The INDON sov curve is flatter today, the 2Y yield is 2bps higher at 5.29%, 5Y yield is 1.5bps higher at 5.325%, the 10Y yield is 3bps higher at 5.475%, while the 5-year CDS is off highs from Friday now at 80bps
  • The INDON to UST spread diff has tighten over the day erasing the move widen made on Friday with the 2Y now 29bps (-4.5bps), 5yr is 63bps (-3.5bps), while the 10yr is 83bps (-4bps)
  • In cross-asset moves, the USD/IDR is down 0.25% at 16,215, the JCI is 0.70% lower, Palm Oil is down 0.25%, while US Tsys yields are 1-4bps higher with curves bear-steepening
  • Indonesia's trade surplus for March soared to its highest level since February 2023, surpassing economist estimates, driven by a larger-than-expected decline in imports. Exports fell on an annual basis due to decreased non-oil and gas exports, while imports experienced a notable decline, particularly in machinery and mechanical equipment shipments
  • Bloomberg believes BI is likely to raise its key rate by 25 basis points to 6.25% to support the weakening rupiah, influenced by delays in US easing, heightened tensions in the Middle East, and rising inflation risks due to increasing costs. Despite strong domestic demand, the central bank aims to stabilize the currency, potentially leading to another rate hike given recent currency depreciation, this follows on from Barclay's calling for a rate hike on Friday.
  • Looking ahead: Focus will turn to BI rate decision on Wednesday.
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The Indonesian sov curve is flatter today, with the belly of the curve performing the strongest, after weakening last week. Indonesia's trade surplus for march soared, while Bloomberg has changed their view and now sees BI raising rates on Wednesday.

  • The INDON sov curve is flatter today, the 2Y yield is 2bps higher at 5.29%, 5Y yield is 1.5bps higher at 5.325%, the 10Y yield is 3bps higher at 5.475%, while the 5-year CDS is off highs from Friday now at 80bps
  • The INDON to UST spread diff has tighten over the day erasing the move widen made on Friday with the 2Y now 29bps (-4.5bps), 5yr is 63bps (-3.5bps), while the 10yr is 83bps (-4bps)
  • In cross-asset moves, the USD/IDR is down 0.25% at 16,215, the JCI is 0.70% lower, Palm Oil is down 0.25%, while US Tsys yields are 1-4bps higher with curves bear-steepening
  • Indonesia's trade surplus for March soared to its highest level since February 2023, surpassing economist estimates, driven by a larger-than-expected decline in imports. Exports fell on an annual basis due to decreased non-oil and gas exports, while imports experienced a notable decline, particularly in machinery and mechanical equipment shipments
  • Bloomberg believes BI is likely to raise its key rate by 25 basis points to 6.25% to support the weakening rupiah, influenced by delays in US easing, heightened tensions in the Middle East, and rising inflation risks due to increasing costs. Despite strong domestic demand, the central bank aims to stabilize the currency, potentially leading to another rate hike given recent currency depreciation, this follows on from Barclay's calling for a rate hike on Friday.
  • Looking ahead: Focus will turn to BI rate decision on Wednesday.