Yield Indonesia Bond 10 Yr should fall soon
The spread between Indonesia Bond 10Yr with US Treasury 10Yr reached the highest level since the end of 2016. The spread is now at 5.8% wherein the beginning of 2018, the spread is only at 3.6% and 5.4% at the beginning of 2019.
The latest increase of the spread (since Jul'19) is caused by the falling of UST 10Yr at high speed (from 2.1% to 1.5% in just a month!). Investor seems worried that the recession is cooking so they bought Risk-Free Asset such as Government Bond.
The yield of US Treasury 10Yr (now at 1.55%) is soon to meet the lowest level in 2016 at 1.4%. This level is so low that it should act as Support (to hold further falling). Once the yield reached 1.4% (and assuming the Yield of Indonesia Bond 10Yr is still around 7.4%) that makes the spread rise to 6%.
Judging by Indonesia is already at higher Investment Grade level (thanks to recent rating upgraded by S&P to BBB from BBB-) and the proposed government budget for 2020, the should be a Buying Interest soon for Indonesia asset. I believe Yield Indonesia Bond 10Yr could fall to 6.5% or at least 7% from current level at 7.4%.
The latest increase of the spread (since Jul'19) is caused by the falling of UST 10Yr at high speed (from 2.1% to 1.5% in just a month!). Investor seems worried that the recession is cooking so they bought Risk-Free Asset such as Government Bond.
The yield of US Treasury 10Yr (now at 1.55%) is soon to meet the lowest level in 2016 at 1.4%. This level is so low that it should act as Support (to hold further falling). Once the yield reached 1.4% (and assuming the Yield of Indonesia Bond 10Yr is still around 7.4%) that makes the spread rise to 6%.
Judging by Indonesia is already at higher Investment Grade level (thanks to recent rating upgraded by S&P to BBB from BBB-) and the proposed government budget for 2020, the should be a Buying Interest soon for Indonesia asset. I believe Yield Indonesia Bond 10Yr could fall to 6.5% or at least 7% from current level at 7.4%.
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