Indonesia 10-Year Yield Edges Lower on Strong Growth, Low Inflation

Indonesia’s 10-year bond yield eased to 6.81% after recently touching a one-year high of around 6.9%, as stronger domestic fundamentals helped stabilize sentiment. Fresh data showed the economy grew 5.61% yoy in Q1 2026, the fastest pace since late 2022, driven by resilient private consumption, firmer government spending, and solid fixed investment. The annual inflation also cooled to 2.42% in April, hitting an eight-month low and comfortably within Bank Indonesia’s 1-1/1%–3-1/2% target, easing policy pressure. Yet the retreat in yields remains measured. Fiscal buffers are narrowing despite efforts to contain costs from President Prabowo’s flagship programs, while cost-push risks persist from higher fuel prices and a weaker rupiah. Globally, elevated yields cap downside: the U.S. 10-year Treasury hovered near 4.44% as inflation concerns, fueled by rising energy prices amid Middle East tensions, kept borrowing costs high.