Fixed Income Update 12 Sep 2024
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 12 September 2024
Will the BI Rate Follow the Fed Rate Cut?
The decline in the U.S. unemployment rate to 4.2% is seen as a positive signal amidst growing concerns over a potential hard landing in the U.S. economy. At the same time, the second and final U.S. presidential debate between Harris and Trump is expected to shift the support of swing states more favorably toward Harris. The upcoming release of the U.S. CPI will be a key determinant of whether the Fed Rate will be cut in the upcoming FOMC meeting on September 18.
Meanwhile, Indonesia's foreign exchange reserves have surged to an all-time high of USD 150.20 billion, providing a cushion for Rupiah stability. On top of that, the issuance of a global bond worth USD1.8 bn and EUR750 mn on September 4, 2024, further bolsters Indonesia’s financial position. With inflation in August 2024 maintained at 2.12% YoY and global oil prices declining, we anticipate that Bank Indonesia (BI) will follow the Fed’s expected rate cut, with at least a 25 bps reduction during BI’s Board of Governors meeting on September 18.
Regards,
KBVS Research Team