FX.co ★ Indonesia 10-Year Yield Rises to Near 3-Week High

Indonesia’s 10-year government bond yield climbed to 6.85%, hovering near a three-week high after U.S. Treasury yields touched a 16‑month peak. Heightened inflation risks stemming from the Middle East conflict strengthened expectations that the Federal Reserve could raise interest rates later this year, prompting investors to cut exposure to emerging‑market assets. Domestically, pressure on local bonds intensified as the rupiah repeatedly fell to new record lows against the U.S. dollar since April, stoking concerns over capital outflows and imported inflation. Investor sentiment was also cautious ahead of Bank Indonesia’s policy meeting this week, after President Prabowo downplayed worries that the rupiah’s weakness signaled a deteriorating economy. Softer domestic fundamentals compounded the strain: retail sales in March recorded their slowest growth in nine months, while consumer confidence in April hovered near a five‑month low. Even so, losses were limited by recent government steps to deploy a bond stabilization fund aimed at supporting market stability.