Bond Market Commentary : October 2023

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Bond Market Commentary : October 2023

Undesirable Condition

The global bond market continued the correction in October 2023. The market has anticipated higher US inflation due to a resilient economy and higher oil prices. Investors think the monetary policy of “higher for longer” can change the terminal rate to be different than expected before which shifts the assumption on when the last rate hike and how long it lasts at a high rate. Additionally, higher yields were also driven by the supply of bonds that were still high. Investors demand higher yields to compensate for the risk. Two major buyers of US Treasuries, China and Japan, are probably declining to own the paper due to flows going back to their own countries. These adjustments make US Treasury yields higher which makes the investors flow back to the US causing the US Dollar stronger and yields around the globe higher.

Bank Indonesia has anticipated a stronger US Dollar by raising the benchmark rate, BI 7D RRR, 25 bps to 6.00%. The change of policy rate in October 2023 was the first time since the last time happened in January 2023. The IndoGb yields rose significantly in adjusting higher US Treasury rate. Meanwhile, the current IndoGb yield curve has become flat where the short-maturity bond yields increase driven by SRBI (Sekuritas Rupiah Bank Indonesia) which offers attractive yields. Volatility in the bond market will be highly affected by the changing global monetary environment. We see current high yield is benefiting investors to have high coupon and potential capital gain once the uncertainty in the bond market clears up.

Product Recommendation


MIDU MIDU invests in Bond Instruments with a Medium-Term segment and is categorized as low to medium risk. Investors bear the risk associated with the Bond Portfolio.
IDAMAN IDAMAN invests in Indonesian Government USD Bonds with a short duration and is categorized as medium risk. Investors bear the risk associated with the Bond Portfolio.

MIDO2 invests in Indonesian Government Rupiah Bonds with a long duration and is categorized as high risk. Investors bear the risk associated with the Bond Portfolio.


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The opinions expressed in the article are for general informational purposes only and are not intended to provide specific advice or recommendations for individuals or specific mutual fund or investment products. It is intended solely to provide education about the financial industry. Views reflected in the content may change at any time without notice. All performance data and investment returns mentioned in this article cannot be used as a basis for calculation to buy or sell a mutual fund. This data is performance records based on historical data and is not a guarantee of future mutual fund performance. Investment through mutual funds carries risks. Investors are required to read and understand the prospectus before deciding to invest through mutual funds.

Written by

Willy Gunawan

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