Fixed Income Update 23 Jul 2026
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 23 July 2026
Balancing Global Risks and Domestic Liquidity Concerns
Middle East escalation has materially broadened global energy and shipping risks. The renewed U.S.–Iran conflict has expanded geopolitical risks beyond the Strait of Hormuz, increasing concerns over broader maritime supply disruptions. Brent and WTI rose to around USD89.8/bbl and USD84.8/bbl, respectively, while higher gasoline prices and rising U.S. Treasury yields reflected renewed inflation concerns. Meanwhile, US has revived its tariff agenda by imposing new tariffs on selected Canadian and Brazilian imports, marking a renewed escalation in global trade tensions.
Domestically, Indonesia strengthened its tax compliance framework via SE-8/PJ/2026 by establishing a 3-pillar supervision model across registered and unregistered taxpayers, alongside regional oversight through local law enforcement (Babinsa and Bhabinkamtibmas). While designed to expand the tax base and support medium-term fiscal capacity, these enforcement measures—coupled with an AAA sovereign rating from Lianhe Credit Rating—provide a positive backdrop for upcoming sovereign financing, such as the scheduled Panda Bond issuance.
Bank Indonesia unexpectedly kept the BI Rate unchanged at 5.75% (against consensus expectations of a 25bps hike to 6.00%) to safeguard domestic credit transmission and liquidity stability. On the other side, the approval of the Indonesia International Financial Center (PFII) Bill into law on July 21, 2026, marks a pivotal structural reform aimed at building an internationally competitive, integrated financial hub. Covering diverse business activities—from banking and wealth management to carbon exchanges and family offices—the PFII framework is designed to expand capital access and foster innovation to complement the existing domestic financial ecosystem.
Regards,
KBVS Research Team