RI benchmark firmer on better sentiment

RI benchmark firmer on better sentiment

HONG KONG (Dow Jones): Spreads on Asian benchmark bonds were
mixed Friday from a week ago, with Indonesia benefiting from
improved sentiment as fears about a possible impeachment of
President Abdurrahman" Gus Dur" Wahid dwindled.

As Gus Dur and the public listened to speeches by
parliamentarians ahead of the vote of confidence, sentiment that
parliament will cast their vote in favor of Wahid became
stronger.

As a result, Indonesia's 2006 benchmark tightened by 36 basis
points against U.S. Treasurys from a week ago.

"The news is good so (market) sentiment is better," said one
trader in Hong Kong.

The difference between bid and offer prices remained wide, at
57 basis points Friday, reflecting the illiquidity of the bond
and a lack of trading due to continued uncertainty.

"There's no real selling or buying" of Indonesia's paper, said
another trader.

Market participants said that trading of Indonesian bonds will
remain volatile and slim at least until the end of the summer
when Indonesia's political future may be clearer.

Elsewhere, Asian bonds remained well bid despite some slight
spread widening overnight because of a drop in U.S. Treasury
yields in the New York session.

U.S. Treasury yields tightened across the board overnight, as
the market rallied after the government's successful sale of $5
billion on 30-year Treasurys. The yields climbed slightly higher
earlier in Tokyo on profit taking.

Traders said that any trading will remain subdued through the
month, ahead of the U.S. Federal Reserve's rate decision on Aug.
22. Recent mixed economic data in the U.S. and more dovish
comments from Federal Reserve officials are leaving market
participants to guess which way the Fed will eventually lean.