(Bloomberg) -- Indonesian bond yields slid the most since November to outperform Asian peers, as a revival of US interest-rate cut bets spurred demand for the notes after they got heavily sold off last month.

The yield on 10-year rupiah bonds fell as much as 26 basis points to 6.91% on Monday, helping to pare the 55-basis-point jump recorded in April. The move followed a rally in Treasuries on Friday after weaker-than-expected US jobs data. 

Sentiment toward Indonesian assets is improving after a risk-off wave hit emerging markets last month amid a ratcheting up of Middle East tensions and fast-changing Federal Reserve policy bets. The Indonesian central bank’s unexpected rate hike last month — which contributed to the bond selloff back then — is now seen helping to attract foreign flows with higher local yields and a wider gap with the US. 

The rupiah gained as much as 0.6% on Monday, among the top gainers in Asia.  

The size of the move suggests foreign investors were likely re-entering the market after Indonesian debt hit oversold levels and presented value, said Philip McNicholas, Asia sovereign strategist at Robeco Group in Singapore. 

With foreign holdings remaining below their pre-pandemic levels and inflationary pressure re-emerging in other regions like Latin America, “Indonesian government bonds could benefit substantially from portfolio re-allocation flows,” he said. 

Foreign investors bought a net $236 million worth of Indonesian government bonds on Friday, the largest inflow since January 5, according to government data compiled by Bloomberg. Last month, they sold $1.1 billion of such securities on a net basis amid the risk-off sentiment in markets, the data show.

Elsewhere in Asia, the yield on Singapore’s 10-year bonds fell seven basis points to 3.31%, while that on Malaysian benchmark notes eased three basis points to 3.92%. 

(Updates with foreign inflow data in seventh paragraph.)

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