Fixed Income Update 11 Jun 2026

KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 11 June 2026

Rupiah Defense Takes Priority

May '26 NFP came in at +272K, with the Unemployment Rate holding low at 4.13% and AHE steady at +3.57% YoY — signaling persistent wage pressure. With Supercore inflation still running at +3.9% YoY, the probability of a prolonged Fed hold has risen, with markets beginning to price in the risk of further hikes. Meanwhile, Headline CPI accelerated to +4.2% YoY (vs. +3.6% prior), with Core at +2.9%. Gasoline led the move at +8.6% YoY, while shelter (+5.3%) and food at home (+2.7%) remained firm. The broad-based pickup across categories reinforces the view that disinflation has stalled, leaving little room for the Fed to cut in the near term.

Domestically, Bank Indonesia raised the BI Rate by 25bps to 5.50% through a special Weekly RDG, signaling a stronger commitment to Rupiah stability and demonstrating its policy independence and flexibility amid heightened global uncertainty. Meanwhile, fiscal performance showed improving revenue collection but faster expenditure growth. Government revenue rose 19.1% yoy to IDR1,185 tn in 5M26, supported by stronger tax collection (+22.1% yoy), while spending surged 34.4% yoy to IDR1,365 tn, driven mainly by Ministry/Agency expenditure (+59.0% yoy).

At the same time, elevated global oil prices are increasingly creating inflationary and fiscal pressures. Pertamax and Pertamax Green prices jumped more than 30% in June alone, while diesel-based fuels have risen 70–82% ytd following the spike in crude prices above USD119/bbl.

Regards,
KBVS Research Team