HALISTER1: Short-End IDR Bonds Set for Correction as BI Holds Rate: NatWest

Short-End IDR Bonds Set for Correction as BI Holds Rate: NatWest

(Bloomberg) -- Indonesia’s front-end bonds are poised for “some correction” as the central bank is unlikely to cut rates further, says NatWest Markets economist Vaninder Singh.
  • “The yield pickup isn’t strong right now, so if you are going to take profit on some of those capital gains, you should do it now before things start to change in the U.S. market”, he says in an interview Tuesday
    • BI unlikely to ease further especially as Fed will probably be hiking again
    • As liquidity tends to be a bit thin in Indonesia’s bond market, a shift in positioning of some funds to neutral from overweight could see some correction
  • NOTE: Indonesia’s 2-year govt note yield drops 6bps to 5.78%, lowest since June 2013
  • NOTE: BI unexpectedly cut its policy rate last Friday to 4.25%
--With assistance from Hooyeon Kim. To contact the reporters on this story: Masaki Kondo in Singapore at mkondo3@bloomberg.net; Netty Ismail in Singapore at nismail3@bloomberg.net To contact the editors responsible for this story: Tan Hwee Ann at hatan@bloomberg.net Patricia Lui

Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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Vaninder Singh (Royal Bank of Scotland Group PLC)

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