The Indonesian government bonds continue to rally on Monday as the Bank Indonesia in its recent report concluded that domestic economy is expected remain subdued in 2016 due to weak global outlook and sluggish domestic consumption.
Also, rising expectations for further Bank Indonesia easing in the upcoming policy meeting is shifting investors towards safe-haven buying.
The yield on the benchmark 10-year bonds fell nearly 6 basis points to 7.223 percent and the yield on short-term 3-year note tumbled 10 basis points to 7.102 percent by 06:00 GMT.
The Bank Indonesia in its latest report mentioned that Gross Domestic Product (GDP) to grow nearly 4.94 percent y/y in the second quarter of 2016, marginally higher than the previous 4.92 percent.
Looking ahead, the trade release for June is due on Friday. As we have been highlighting, the global slowdown has hurt exports, especially to China and the Eurozone. The trade data for May showed exports falling by 9.8 percent y/y, mainly because of lower oil and other commodity prices, and we are looking for -8.0 percent y/y in June. Imports declined by 4.1 percent y/y in May, indicating weak domestic demand, and we see them printing -5.0 percent y/y in June. The trade surplus narrowed to USD 0.4 billion in May and we see it widening slightly to USD 0.6 billion in June.
Meanwhile, The benchmark Jakarta Stock Exchange Composite (JKSE) traded higher 1.52 percent, or 75.80 points, at 5,047.38 by 06:30 GMT.
