Indonesian Sov Curve Flattens, Barclays See BI Cutting Next Week

The Indonesian sov curve has flattened today, pivoting at the 7yr, with yields 1-6bps following moves made during the US session on Wednesday. Barclays thinks BI will Hike rates next week to support the struggling IDR.

• The INDON sov curve is flatter today, the is 2Y yield unchanged at 5.24%, 5Y yield is 4bps lower at 5.26%, while the 10Y is down 5bps today, following a 6bps move lower on Wednesday, while the 5-year CDS is 2bps lower at 78bps.
• The INDON to UST spread has widen over the past day, the 2Y is 32bps (+4bps), 5yr is 67bps (+5bps), while the 10yr is 83bps (+2bps)
• In cross-asset moves, the USD/IDR is down 0.23% at 16,182, the JCI is 0.27% higher, Palm Oil is 0.20% higher, while US Tsys yields are 1-2bps lower.
• Barclays predicts that BI will likely raise its policy rate by 25bps at its April 24 meeting to support the rupiah, with the possibility of a more significant hike given the currency's rapid decline with the IDR is off 3.82% over the past month. The forecast assumes BI's cautious approach amid concerns about one-off dividend flows affecting the rupiah, signaling potential openness to further increases.
• Looking ahead: Calendar remains empty until Trade Balance on Monday and BI rate decision on Wednesday