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Indon Sov Debt Curve Bull-Steepens, BI In No Rush To Cut Rates

INDONESIA
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Indonesian USD sovereign debt curve has followed UST yields lower, although the front-end has continued to lag the move. INDON yields are 1-4bps lower. The FOMC meeting overnight has been the main driver for rates, while The Bank Indonesia held their interest rates on hold at 6.00% in what was widely expected with focus largely on FX stability after the IDR has fallen 2% against the USD so far this year. JPM expects the BI to cut twice this year, however this will be largely reliant on when the US cuts.

  • The INDON sov curve has bull steepened post the FOMC overnight with front-end yields 2-4bps lower while the mid to longer end is 1-2.5bps lower, the 2Y yield is 4bp lower at 4.945%, 5Y yield is 4bps lower at 4.93%, the 10Y yield is 2.5bps lower at 5.025%, while the 5-year CDS moved almost 6bps higher on Wednesday but has reversed some of those moves to trade down 2bps from highs at 71.5bps
  • The INDON to UST spread difference drifted wider on Wednesday, continuing the weekly theme, with the front-end underperforming moves in UST The 2yr is 35.5bps (+6bp), 5yr is 70bps (+1.5bps), while the 10yr is 76.5bps (-0.5bps).
  • In cross-asset moves, the USD/IDR is 0.35% lower, the JCI is 0.60% higher, Palm Oil is pushing higher, up 0.33%, while US Tsys yields are 1-3bps lower.
  • Foreign Investors sold bonds again on Tuesday now marking 9 of 10 day of net selling by foreign investors. The 5-day average is now -$63m, the 20-day average is -$53m while the longer term 200-day average is now just $0.03m
  • Elsewhere, in what was widely expected Prabowo's Indonesian Election win has been question in court by rival. While Indonesian's economy will probably grow 4.7%-5.5% this year, while inflations outlook is 1.5%-3.5% for the year according to the BI.
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Indonesian USD sovereign debt curve has followed UST yields lower, although the front-end has continued to lag the move. INDON yields are 1-4bps lower. The FOMC meeting overnight has been the main driver for rates, while The Bank Indonesia held their interest rates on hold at 6.00% in what was widely expected with focus largely on FX stability after the IDR has fallen 2% against the USD so far this year. JPM expects the BI to cut twice this year, however this will be largely reliant on when the US cuts.

  • The INDON sov curve has bull steepened post the FOMC overnight with front-end yields 2-4bps lower while the mid to longer end is 1-2.5bps lower, the 2Y yield is 4bp lower at 4.945%, 5Y yield is 4bps lower at 4.93%, the 10Y yield is 2.5bps lower at 5.025%, while the 5-year CDS moved almost 6bps higher on Wednesday but has reversed some of those moves to trade down 2bps from highs at 71.5bps
  • The INDON to UST spread difference drifted wider on Wednesday, continuing the weekly theme, with the front-end underperforming moves in UST The 2yr is 35.5bps (+6bp), 5yr is 70bps (+1.5bps), while the 10yr is 76.5bps (-0.5bps).
  • In cross-asset moves, the USD/IDR is 0.35% lower, the JCI is 0.60% higher, Palm Oil is pushing higher, up 0.33%, while US Tsys yields are 1-3bps lower.
  • Foreign Investors sold bonds again on Tuesday now marking 9 of 10 day of net selling by foreign investors. The 5-day average is now -$63m, the 20-day average is -$53m while the longer term 200-day average is now just $0.03m
  • Elsewhere, in what was widely expected Prabowo's Indonesian Election win has been question in court by rival. While Indonesian's economy will probably grow 4.7%-5.5% this year, while inflations outlook is 1.5%-3.5% for the year according to the BI.