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Indonesian Sovereign Debt Curve Bear Steepens, Trade Balance Narrows


Indonesian USD sovereign debt curve has bear steepened post US PPI data on Thursday, with yields 4-7bps higher, elsewhere trade balance narrowed narrowed in February with a decline in exports outweighing the marginal drop in imports.

  • On Friday yields are 4-7bps higher, the 2Y yield is 3bps higher at 4.96%, 5Y yield is 5bps higher at 4.96%, the 10Y yield is 7bps higher at 5.06%, while the 5-year CDS is up 1bp to 68.5bps.
  • The INDON to UST spread difference has closed over the past week, with the front-end INDON curve out-performing, the 2yr is 28bps, 5yr is 28bps, while the 10yr is 78bps.
  • In cross-market moves, the USD/IDR is 0.29% higher, the JCI is 0.90% lower, while US Tsys yields are 1-2bps lower
  • Indonesia experienced a 9.5% year-over-year decline in exports to $19.31 billion in February, while imports surged 15.8% annually to $18.44 billion, resulting in a trade surplus of $870 million, down from $2.02 billion in the previous month. Notably, non-oil and gas exports saw a significant decrease, particularly in iron and steel, which dropped by 27.1% to $622.5 million, while imports of electrical machinery and equipment decreased by 3.9%.
  • Looking ahead: Wednesday BI Rate decision, expected to hold steady at 6.00%

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