Fixed Income Update 15 Jan 2026
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 15 January 2026
Indonesia’s Global Bond Issuance Amid Heightened Geopolitical Risks and Evolving U.S. Monetary Policy
Greenland’s prime minister stated that, if forced to choose immediately, Greenland would align with Denmark rather than the United States, reaffirming its position amid renewed U.S. strategic interest. At the same time, geopolitical tensions persist in the Middle East.
Against this backdrop, global markets are also navigating shifting U.S. macro dynamics: easing inflation pressures have reinforced expectations for three 25 bps Federal Reserve rate cuts in 2026, though concerns over central bank independence have resurfaced following Chair Powell’s remarks on alleged political pressure, even as proposals for large-scale agency MBS purchases are expected to weigh on yields and help cap further upside in the U.S. dollar despite mixed labor market signals.
The Government of Indonesia successfully priced a three-tranche Global Bond issuance totaling USD 2.7 billion on 12 Jan ‘26, comprising 5-year (USD1.1 bn), 10-year (USD1.1 bn), and 30-year (USD500 mn) tenors, thereby securing substantial external financing early in the fiscal year. However, the issuance has yet to support a meaningful appreciation of the Rupiah, as it appears to be driven primarily by fiscal funding considerations rather than exchange-rate stabilization.
At the same time, expectations of a deeper U.S. Federal Reserve rate cut—potentially followed by Bank Indonesia—combined with elevated global geopolitical risks, a prevailing risk-off sentiment, and continued Rupiah depreciation, have driven a convergence in Indonesian government bond (SUN) yields over the past week and are likely to shape yield movements in the near term.
Regards,
KBVS Research Team