Bonds are Moving: Is it Time to Buy Government Bonds?
Government bonds are in focus as yields climb. Learn what rising bond rates mean for investors and when opportunities may look more attractive.
The market has been on edge following yesterday’s cabinet reshuffle, especially with the Finance Minister being replaced. The JCI dropped another –1.8%, while bond yields quickly moved higher as investors looked for safer ground. With bond prices declining, is it a good time to buy, or should we wait a little longer?
Bonds Were the Talk of the Market Today
Today, the 10-year government bond yield rose from 6.39% to 6.45% as investors absorbed the recent cabinet changes. Even so, demand for bonds hasn’t vanished. Today’s government bond auction still attracted around 79 trillion Rupiah. That’s a solid figure, though noticeably softer than the 140 trillion Rupiah we saw just two weeks ago. The takeaway? Investors remain interested, but they’re becoming more selective.
Where are Yields Heading?
In the near term, we expect yields to hover around the 6.4 – 6.5% range. While that level might sound elevated, it’s not yet attractive enough from an investment perspective. A more compelling entry point could open if the 10-year yield moves past 6.8% or the 15-year yield rises above 7%, as these levels would allow us to lock in stronger returns.
Global Moves & What It Means for Us
Globally, markets are pricing in the possibility of a Fed rate cut, which in theory should put downward pressure on yields. At the same time, Bank Indonesia aims to keep yields contained to manage funding costs. For now, our bond portfolio is positioned slightly below the benchmark duration. This gives us flexibility. If yields climb further, we’ll remain aligned with the market and well-placed to capture opportunities when yields eventually move lower.
Is Now a Good Entry Point for Government Bonds?
For now, we believe patience is still the better strategy. Although yields are moving in the right direction, more attractive opportunities could open up if yields move higher. In the meantime, rest assured, we’ll keep monitoring the market closely and share timely updates, so you’ll know when market conditions look more favorable to enter.