IndoGBs experienced a sell-off in tandem with further rupiah weakness as renewed geopolitical tensions and persistently elevated oil prices amplified Indonesia's external vulnerabilities. The curve flattened notably as the 2-year and 5-year yields rose by around 7 bps, while the 10-year yield was kept relatively anchored by sustained BI interventions. These dynamics culminated in the 5y10y spread dipping to -1 bps today, pushing the back end of the curve into slight inversion. Crucially, this risk-off repricing unfolded despite a stronger-than-expected Q1 GDP print and contained inflation reading. At the same time, BI's active market intervention to prop up front-end yields and anchor the 10-year tenor likely drew in some marginal foreign inflows last week but the broader market trajectory remains firmly dictated by global headwinds. Until geopolitical tensions show signs of easing and the rupiah stabilise, a cautious stance remains warranted, with the curve likely to stay relatively flat under continued policy intervention.
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