Mandiri Sekuritas Put down the barbell, it’s time for short-term bullet strategy

Indonesia bond market has been performing well so far this year, with total return of 4.8%ytd or 7.5% in term of USD. Our barbell portfolio suggestion in early this year gives higher return of 4.9%. Foreign fund inflows were still the main catalyst for the bond rally. We believe that all positives have been already priced in. The 10-year government bond yield is trading at 9.44%- the lowest since Nov-07. As the yield curve has normalized, we change our optimum portfolio strategy to bullet with shortening duration from the barbell strategy.