Fixed Income Update 24 Apr 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 24 April 2025
TRADE NEGOTIATIONS SEEN AS A KEY FORWARD-LOOKING FACTOR
Trade negotiations between the United States (U.S) and its relevant counterparts remain ongoing. However, both President Trump and Scott Bessent appear to have adopted a more conciliatory stance, likely in response to rising concerns over stagflation—a combination of increasing inflation and slowing economic growth—as previously highlighted by Federal Reserve Chair Jerome Powell. This shift may suggest that the “Trump Tariff” could ultimately serve as a bluffing tactic (tariff bluff), although it has already triggered heightened volatility and a sell-off in U.S. financial markets last week.
Meanwhile, Indonesia’s trade delegation must also pursue a strong bargaining position in its negotiations with the U.S. While the U.S. remains Indonesia’s second-largest export destination, the specific nature of Indonesia’s export products and the U.S.’s dependency on them could provide valuable leverage for negotiating terms that benefit Indonesia. On the domestic front, Bank Indonesia has maintained its benchmark rate at 5.75%, signaling a continued commitment to both growth and stability. With the potential for a rate cut still on the table, there remains room for monetary easing toward the end of 2025.
Regards,
KBVS Research Team