Bond Market Under Pressure Again

On November 14, 2016, domestic bond prices were again under pressure due to ongoing uncertainty in the global financial market. Concerns over US President-elect Donald Trump's protectionist policies and the US Federal Reserve's planned interest rate hike at the December 2016 Federal Open Market Committee meeting caused Indonesian bond prices to fall.

The Composite Bond Index (ICBI) on November 14, 2016, fell again by 2.1023 points (1 percent) to 207.7442 from its November 11, 2016, level. The government bond index (Total Return) fell by 1.06 percent to 204.7993. Similarly, the corporate bond index (Total Return) also corrected by 0.59 percent to 220.602.

Government bond prices fell more sharply than corporate bonds, government sukuk, or corporate sukuk. The decline in prices resulted in a rise in domestic bond yields. Foreign investor ownership of Indonesian government bonds (Surat Utang Negara) decreased to 43.48 percent on November 11, 2016, compared to 43.97 percent on November 4, 2016.