Fixed Income Update 04 Jun 2026
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 4 June 2026
Navigating Endless Global Volatility and Domestic Climate Pressures
Globally, the collapse of post-summit peace talks has triggered a severe dual-front macro shock. The IRGC's synchronized blockade of the Strait of Hormuz and Bab El-Mandeb has paralyzed 25% of global energy supply, driving Brent crude toward USD 97.99/bbl. Compounding this, Trump’s weaponization of USTR Section 301 introduces a 10%–12.5% manufacturing tariff across 60 nations. This protectionist wave has pushed the US 30Y Treasury yield to 5.20% and solidified a 98.4% market consensus for a Fed rate hold at 350–375 bps this June, completely erasing rate cut hopes for 2026.
Domestically, these external pressures are hitting Indonesia's inflation and trade balance hard. An El Niño-driven supply shock combined with fuel price pass-throughs has accelerated headline inflation to 3.08% YoY. Simultaneously, the global energy crunch exploded the oil import bill by 82.52% YoY, shrinking the trade surplus to a near-record low of USD 0.09 billion. This narrowing surplus, alongside heavy safe-haven dollar demand, triggered a massive IDR 21.43 trillion foreign equity sell-off—dragging the Rupiah to Rp17,838/USD and forcing Bank Indonesia into a defensive 50 bps rate hike to 5.25%.
Regards,
KBVS Research Team