Fixed Income Update 27 Mar 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 27 March 2025
The Importance of Effective Communication
The expectation of further easing by major central banks worldwide provides room for a decline in the cost of funds going forward. This is further compounded by the ongoing back-and-forth regarding the implementation of Trump’s tariff policies. In addition, China’s planned stimulus measures for its domestic economy are expected to provide further support for a more positive outlook on global economic growth.
However, a stark contrast is observed in Indonesia’s financial markets. Despite the global downtrend in the cost of funds and improving economic expectations, Indonesia’s financial markets are facing significant pressure. The recent trading halt on the Jakarta Composite Index (IHSG), the Rupiah’s depreciation to its lowest level since 1998, and the significant rise in government bond (SUN) yields present an anomaly amid an otherwise improving global economic momentum. We believe this situation is primarily driven by ineffective and, at times, reckless communication by the authorities, which has fueled negative market expectations rather than stabilizing investor sentiment. Moving forward, we hope this issue can be swiftly addressed, allowing Indonesia’s financial markets to benefit from the improving global outlook.
Regards,
KBVS Research Team