Government Bond Highlights
At the auction of sovereign bonds (SBN) dated 08/28/2018, the government absorbed the funds of IDR20 trillion with the total incoming bid of IDR59.284 trillion. The amount absorbed was higher than the indicative target of IDR10 trillion. The government bonds (SUN) with the 5-year tenor, namely FR0064, obtained the biggest bid of IDR17.274 trillion. Indonesia Composite Bond Index (ICBI) closed lower by 0.75% to 233.94.
The government bonds market closed lower due to the varied global volatility, particularly the U.S. dollar strengthening against emerging market’s currencies following the Fed’s optimism of the U.S. economic backdrop. The release of the U.S.’s economic growth data signaled that the 2Q18’s GDP grew by 4.2% topping the market estimate of 4.1%. The prolonged trade war between the U.S. and China, as well as the Turkey’s financial crisis re-escalating and Argentina’s peso depreciation contributed to the weakening in the government’s bonds market during last week.
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