Indonesian bonds resume decline as market confidence stays weak

INDONESIA’S bond selloff resumed on Thursday (Jun 11) after a surprise interest-rate hike earlier this week provided only temporary relief, with investors once again focusing on the broader economic concerns that have fueled a market rout.

The 10-year yield rose nine basis points to 7.43 per cent, while the five-year yield edged higher three basis points to 7.49 per cent. The rupiah weakened 0.1 per cent and the benchmark stock index fell as much as 0.9 per cent before rebounding.

The bond selloff came after officials had sought to reassure foreign investors, triggering a relief rally that lifted the rupiah the most in more than a year, eased pressure on bonds and boosted equities.

Indonesian markets remain volatile as investors assess whether officials can rebuild confidence shaken by President Prabowo Subianto’s interventionist agenda.

The outlook has become more complicated as rising tensions in the Middle East drive up oil prices, threatening to widen Indonesia’s trade deficit, stoke inflation and put fresh pressure on the rupiah. BLOOMBERG