Geopolitical Tensions Rise, Indonesia's Bond Market Remains Resilient
JAKARTA — Global geopolitical dynamics throughout February 2026 have exerted pressure on financial markets, ranging from changes in US tariff policy to Middle East conflicts that have triggered a surge in global oil prices.
Despite these uncertainties, Indonesia’s bond market continues to demonstrate relatively stable resilience. The BINDO bond benchmark index has recorded positive performance amid increasing government bond yields.
Ezra Nazula, Director and Chief Investment Officer of Fixed Income at Manulife Asset Management Indonesia, stated that market volatility has occurred due to a number of global and domestic factors that have emerged nearly simultaneously.
“Indeed, both global and domestic market dynamics were very high in February,” Ezra said in a Seeking Alpha market review for March 2026 received by Kompas.com on Wednesday (11 March 2026).
He added that changes in US tariff policy as well as US–Iran conflict have been surprising factors for the market.
“On the domestic side, the rating agency Moody’s downgraded Indonesia’s rating outlook from stable to negative, highlighting the government’s policy mix and fiscal position,” he said.
However, the yield on 10-year government securities (SBN) increased from 6.33 percent to 6.42 percent.
The escalating Iran conflict has also influenced market movement. As of 6 March 2026, the yield on 10-year SBN rose again to around 6.60 percent.
Uncertainty has also emerged from US tariff policy following the US Supreme Court’s cancellation of reciprocal tariffs.
Ezra explained that if the United States implements a universal tariff of 15 percent as a replacement, the overall impact is estimated not to be particularly significant.
Under that scheme, the average effective US tariff is estimated to decline from 15.3 percent to 13.1 percent.
However, the replacement tariff policy only applies for 150 days in accordance with US law provisions, unless President Donald Trump obtains congressional approval to extend it.
This means uncertainty could potentially continue if the US government changes the tariff structure again after that period ends.
The Iran conflict is also a focus of the global market due to the country’s strategic position in the Strait of Hormuz.
Approximately 20 percent of global oil distribution passes through this waterway, which is the main export route for oil-producing nations in the Persian Gulf such as Qatar, Kuwait, and Iraq.
For this reason, the Strait of Hormuz is often referred to as an important chokepoint that determines global oil supplies and is prone to triggering price surges.