Fixed Income Update 03 Jul 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 3 July 2025
Time to Refocus on Fiscal Fundamental
Following the ceasefire agreement between Iran and Israel reached on June 24, accompanied by a 60-day truce in Gaza, risk-off sentiment in the capital markets has begun to ease. However, as we enter early Jul ‘25, several developments—particularly concerning future fiscal fundamentals—warrant close attention, notably:
• From the U.S., the so-called “Big Beautiful Bill,” which involves an increase in the debt ceiling by USD3.0tn to USD5.0 tn
• On the domestic front, Finance Minister Sri Mulyani stated that Indonesia’s 2025 budget deficit is projected to widen to 2.78% of GDP, alongside a downward revision to the economic growth forecast to a range of 4.7%–5.0%.
In addition, market sentiment remains somewhat at odds with the Federal Reserve's policy stance, which continues to be a key consideration.
Attention is also turning toward the expiration of the Trump Tariff Pause, scheduled for July 9.
Finally, upcoming releases of real sector data along with other key global, regional, and domestic economic indicators, will play a significant role in shaping market expectations moving forward.
Regards,
KBVS Research Team