Fixed Income Update 16 Oct 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 16 October 2025
Indonesia’s Bonds Shine as Global Markets Balance Optimism and Risk
The easing geopolitical tensions in the Middle East and growing expectations of further Fed rate cuts supported a rally in global government bonds last week, leading to a broad decline in yields. However, risks persist. Concerns over a potential U.S. government shutdown and renewed trade frictions between the U.S. and China have reintroduced uncertainty that could temper the recent bond market optimism.
Domestically, despite Indonesia’s widening fiscal deficit, market confidence remains strong. Positive remarks from Finance Minister Mr. Purbaya have reinforced optimism over Indonesia’s economic resilience, helping sustain investor trust in the government bond market. As a result, yields on SUN continued to decline, supported by strong demand in the SBSN latest auction and recent dual-currency global bond issuance. Nonetheless, global risks—from fiscal tensions in the U.S. to China’s uneven recovery—remain key factors to monitor, as they could shape sentiment toward emerging-market bonds in the weeks ahead.
Regards,
KBVS Research Team