GLOBAL ECONOMY:
Throughout the week, USTs experienced sharp price swings, as markets were rattled by the Powell dismissal rumors. Early in the week, speculation emerged that Trump had prepared a letter to remove Powell from his position as Fed Chair. Trump later denied the plan, though he still floated the possibility if Powell were found to have committed fraud. In response, Powell sent a letter to the White House, signaling his commitment to serving the public interest. Separately, progress began to surface in tariff disputes. Deals were finalized with Indonesia, while other countries—such as Thailand and India—rushed to accelerate their negotiations.
From China, economic data pointed to still-solid performance. In 2Q25, GDP grew by +5.2% y-y (cons: +5.1% y-y, prev: +5.4% y-y), driven by front-loaded export demands. Unfortunately, markets saw the recovery to be short-lived. Last month’s retail sales signaled slowdown (curr: +4.8% y-y, cons: +5.6% y-y, prev: +6.4% y-y). From Japan, core-core CPI rose to +3.4% y-y last month (prev: +3.3% y-y), raising concerns over PM Ishiba’s electability. If the opposition wins the upcoming election, Japan’s fiscal prospects could weaken, which was why JGB yields hit decades-high figure.
Next week, there would be releases on China’s Jul’25 1yr (cons: 3.0%, prev: +3.0%) and 5yr (cons: 3.5%, prev: 3.5%)
DOMESTIC ECONOMY:
This week, the govt. secured at least two major deals: US tariffs and I-EU CEPA. On Trump’s reciprocal tariffs, Indonesia was imposed 19% rate, outperforming most—if not all—countries, esp. those with significant trade surpluses against US (Figure 5). This could position Indonesia as a more attractive investment destination, with domestic consumption expected to strengthen over time. As for I-EU CEPA agreement, a key milestone was that 80% of Indonesia’s products would now enjoy tariff-free access. A notable highlight was CPO, which will now have easier entry into the EU market.
On monetary front, BI-Rate was cut to 5.25% (TRIM: 5.25%, cons: 5.50%, prev: 5.50%). The central bank pledged to go all-out in supporting growth. Rooms for further rate cut remained there, they added (please view Trimegah Economics 20250717 – Monetary Update). We reiterated our call of 4.50% BI-Rate by this year end.
Next week will see the release of Jun’25 M2 supply (prev: +4.9% y-y).
DOMESTIC BOND MARKET:
Govt. bond ownership flow:
As of 16 Jul’25, banks recorded an outflow of -IDR5.3tn w-w to the govt. bonds, making up to IDR1,264tn or ~19.9% of total ownership in the govt. bonds. Meanwhile, the central bank recorded an inflow of +IDR16.6tn w-w to the total IDR1,548tn or ~24.4% of total ownership in the govt. bonds. From the non-bank investor classification, outflow was recorded at -IDR0.3tn w-w to the total of IDR3,531tn or ~55.7% ownership from total. Foreign investors also saw an outflow of -IDR3.2tn w-w this week to the total of IDR933tn or ~14.7% of govt. bond ownership to total.
Important event next week
· Sat (19/7): –
· Sun (20/7): –
· Mon (21/7): (USA) Leading Index
· Tue (22/7): –
· Wed (23/7): (USA) MBA Mortgage Applications, Existing Home Sales
· Thu (24/7): (USA) Initial Jobless Claims, S&P Global US Manufacturing PMI, New Home Sales, (Eurozone) ECB Main Refinancing Rate, ECB Deposit Facility Rate, HCOB Eurozone Manufacturing PMI, ECB Marginal Lending Facility, (Japan) S&P Global Japan PMI Mfg
· Fri (25/7): (USA) Durable Goods Orders, U. of Mich. Sentiment, (Japan) Tokyo CPI Ex-Fresh Food YoY
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