IndoGBs exhibit continued sensitivity to broader risk-off movements, despite current valuation metrics suggesting attractive pricing levels. In the recent retracement, prompted by the ongoing diplomatic stalemate and an extended ceasefire, domestic government bonds experienced broad-based selling across the curve and yields have risen back above early April levels. This movement signal a shift from the recovery during the initial 2-week ceasefire, as foreign investors reduced their prior accumulation of Indonesian debt.
With the 12-month SRBI yielding 5.9%, short-end yields are structurally supported, which effectively anchors the 2-year tenor. The steepening observed in the 2-year to 5-year segment, despite this front-end anchor, indicates adjustments in medium-term positioning. Conversely, the 5-year to 10-year spread has flattened further, likely supported by central bank market operations. However, with Brent crude trading above $108, upward pressure is returning to the long end of the curve. This raises the probability that mounting fiscal considerations could initiate a steepening at the back end. 
The domestic economic calendar is light this week, providing few localised catalysts. Nonetheless, market participants can anticipate a trading environment characterised by elevated variance, as the directional bias will be predominantly dictated by external factors. A series of major global central banks are scheduled to deliver policy decisions and are expected to act as the primary catalysts for capital flows and cross-asset repricing in the near term.
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