US Treasury 10-year yield held up at around 3.4% – 3.6% in April 2023. The US investors are buying more long- term bonds as they expect The Fed will reach the peak of monetary policy. They see that the chance to own high- yield bonds is limited. Hence, the inverted yield curve will persist until the monetary policy changes its direction. Meanwhile, US retail investors are heavily buying US Treasury bills (Government bonds below 1 year) because big banks (JP Morgan Chase, Wells Fargo and Bank of America) are still by and large paying customers near-zero return on their deposits, even though the Fed has pushed official interest rates to a range of 4.75% to 5.00%.

We view the domestic bond market performed well in April as IndoGb yield is stable at the range of 6.5% – 6,8%. The spread between benchmark yields was 310 – 350 bps in April 2023. One of the factors that the yield can be maintained below 7% is flush liquidity in the domestic market. With the declining inflation rate, bond investors can benefit from a better real yield. Nevertheless, we expect volatility in the bond market is still high and hiding in short-duration funds is more sensible.