Fixed Income Update 22 Jan 2026
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 22 January 2026
Rising Global Yields and Geopolitical Risks Test Rupiah, While BI Holds the Line
Global markets turned risk-averse amid rising geopolitical and fiscal uncertainty. Trump briefly threatened tariffs of up to 25% on several European countries over Greenland before suspending the plan after talks with NATO, while simultaneously signaling tougher rhetoric toward Iran as regional tensions and domestic unrest intensified and Iraq completed the withdrawal of U.S. forces.
In Asia, Japan’s 10-year bond yield spiked on fiscal concerns linked to proposed tax cuts ahead of a possible snap election, then eased following government reassurances. These developments lifted global bond yields, delayed expectations for Fed rate cuts into the second half of 2026, stabilized the U.S. dollar within the 98.0–100.0 DXY range, and pushed gold prices back above USD 4,800 per ounce.
Rupiah depreciation remains the key concern this week, particularly in the fixed income market, as global pressures persist despite the equity index reaching an all-time high. Bank Indonesia reaffirmed its commitment to stability by holding the BI Rate at 4.75% at the 20–21 January 2026 Board of Governors’ Meeting, while continuing coordinated interventions in the spot, NDF, and DNDF markets and pro-market monetary operations, including secondary market purchases of government bonds. BI maintains a data-dependent stance on potential rate cuts, prioritizing currency stability to anchor inflation expectations, and remains confident in a gradual Rupiah appreciation supported by solid fundamentals and attractive yields, alongside stronger policy coordination with the government and KSSK to enhance liquidity, credit growth, and economic expansion.
Regards,
KBVS Research Team