HIGHLIGHTS
- On January 29, 2025, the 10-year US Treasury yield declined by 4 basis points (bps), reaching 4.55%, down from 4.89% on January 22, 2025. In contrast, the 2-year US Treasury yield also fell to 4.21% during the same period. Meanwhile, the yield on the 10-year Indonesian Government Bond (INDOGB) decreased by 9 basis points, settling at 7.05% on January 24, 2025.
- The US Dollar Index experienced a 1.84% decline week-over-week, while the Indonesian Rupiah appreciated by 1.17%, with the exchange rate closing at IDR 16,173 per US Dollar on January 24, 2025. Additionally, Indonesia's 5-year Credit Default Swap (CDS) narrowed by 2 bps, reaching 74 bps on January 24, 2025.
- The volume of government bond transactions reached IDR 75.06 trillion, with medium-term bonds (5-15 years) accounting for the majority. This marked an increase from the previous day's volume of IDR 29.49 trillion, and was higher than the year-to-date (YTD) average of IDR 48.25 trillion. Outright transactions amounted to IDR 38.09 trillion, up from the previous day's total of IDR 15.87 trillion.
- The total volume of corporate bond transactions was recorded at IDR 1,459 billion, predominantly in short-term bonds (<5 years). This represented an increase from the previous day's volume of IDR 705 billion, though it was lower than the YTD average of IDR 2,004 billion. Outright transactions in corporate bonds totaled IDR 1,317 billion, up from IDR 704 billion the previous day.
- The Jakarta Composite Index (JCI) decreased by 0.92%, falling to 7,166 from 7,233. Brent crude oil prices dropped from USD 79.87 to USD 78.92 per barrel, while the WTI Cushing Crude Oil Spot price fell from USD 75.71 to USD 74.93 per barrel.
GLOBAL UPDATES
- The FOMC voted unanimously to keep the federal funds rate in a range of 4.25%-4.5% in the January meeting. Strong economic growth coupled with a solid labor market allows officials to wait for further evidence of cooling inflation before adjusting rates again. It also offers them time to evaluate how President Donald Trump‘s policies on immigration, tariffs and taxes may impact the economy.
- When asked specifically about the potential for cutting rates at the Fed’s next meeting in March, Powell reiterated policymakers are not in a rush to lower borrowing costs. He stressed that the Fed wants to see “serial readings” suggesting further progress on inflation. (Bloomberg)
DOMESTIC UPDATES
- The government will hold an auction for State Sharia Securities (SBSN) or State Sukuk on Thursday, January 30, 2025. The following series will be offered: SPNS07072025 (Reopening), SPNS13102025 (New Issuance), PBS003 (Reopening), PBS030 (Reopening), PBSG001 (Reopening), PBS034 (Reopening), and PBS038 (Reopening). The government has set a target of IDR 10 trillion for this auction. The results of the State Sharia Securities auction held on January 14, 2025, revealed a total incoming bid of IDR 14.06 trillion, surpassing the IDR 10.79 trillion bid received during the previous auction on December 17, 2024. The total nominal awarded in this auction amounted to IDR 10 trillion, in line with the government’s target, and higher than the IDR 8 trillion awarded in the previous auction. As a result, the bid-to-cover ratio for this auction stood at 1.41x. BRI Danareksa Sekuritas estimates that total incoming bids for the upcoming auction could range between IDR 15 trillion and IDR 25 trillion, with an expected bid-to-cover ratio between 1.50x and 2.50x. (Sources: DJPPR, BRIDS Estimated)
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