Fixed Income Update 05 Jun 2025
KBVS WEEKLY FIXED INCOME UPDATE
Thursday, 5 June 2025
Has the Trade Agreement Been Broken?
President Trump accused China of breaking a recent trade deal, warning it could lead to a renewed trade war. The 90-day agreement had lowered tariffs on both sides, though Trump gave no details on how China violated the deal. Meanwhile, a U.S. court struck down the remaining 30% tariffs on Chinese goods, though a higher court has temporarily reinstated them. At the same time, industries like carmakers are warning of possible shortages due to China’s export restrictions. Treasury Secretary Scott Bessent said trade talks with China are currently stalled, but a call between Trump and President Xi may take place soon. He also noted that little progress has been made since the Geneva talks.
In the domestic market, the inflation announcement came as a surprise. Headline inflation fell to 1.6%, approaching the lower bound of Bank Indonesia’s target range (2.5% ± 1%). Core inflation also declined to 2.4%, indicating a weakening of the national economy. On the other hand, MoF has issued an economic stimulus package, hoping it will create a multiplier effect and help revive economic growth.
Regards,
KBVS Research Team