Fixed Income Update 09 Oct 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 9 October 2025
Fiscal Uncertainty Abroad Meets Strategic Adjustments at Home
The U.S. government shutdown has stretched into its second week with no resolution in sight, fueling concerns over a wider economic slowdown. Key government services and data releases have been halted, adding uncertainty for businesses and policymakers. Prolonged furloughs are expected to weigh on consumer spending and 4Q25 growth.
At the same time, weaker demand expectations and higher U.S. oil output have pressured oil prices, while investors flock to gold, driving prices to new records. Markets now fully expect two more Fed rate cuts this year amid signs of a cooling labor market, though fiscal risks linked to the shutdown and issues in Japan, France, and the EU have supported the DXY and kept bond yields volatile.
In Indonesia, FX reserves slipped to USD148.7 bn, while the government unveiled plans to shift deposits from major state banks to regional banks to spur SME lending, alongside cuts to regional transfers to maintain fiscal discipline. This mix of stimulus and restraint may reshape regional liquidity and spending dynamics.
Bond markets reacted positively, with SUN yields falling across tenors, mirrored by declines in corporate bond yields. SRBI auction yields continued to ease, while SVBI demand remained concentrated in the shortest tenor. Consumer confidence dipped slightly to 115.0, signaling a more cautious sentiment.
Regards,
KBVS Research Team