Weekly Economics & Rates

WRAP UP FOR THE WEEK ENDED Jan 30

The Tempest, and New Board of OJK & IDX

GLOBAL ECONOMY:

Last week’s meeting of the Fed’s FOMC kept policy rates unchanged at 3.75% (cons: 3.75%), reinforcing the message that the Fed remains cautious as it assessed inflation dynamics and economic resilience. Market attention, however, quickly shifted to Donald Trump’s nomination of Kevin Walsh as the next Fed Chair. Walsh, a former Fed’s Governor and seasoned macroeconomic policy expert with experience across central banking and international finance, was widely perceived as a balanced figure, neither aggressively hawkish nor overly dovish with a strong emphasis on financial stability and institutional credibility. Following the announcement, gold prices edged lower as safe-haven demand softened, while US equity markets remained broadly steady, reflecting investor confidence that monetary policy was likely to stay predictable and disciplined under the current trajectory. Meanwhile, the latest US govt. shutdown reflected intensifying political gridlock in Washington, temporarily disrupting federal operations and adding another layer of uncertainty to markets already navigating tight monetary conditions and global volatility.

Iran remained in a state of deep internal turmoil following nationwide protests that met with a harsh crackdown by security forces, mass arrests, and ongoing unrest, drawing international scrutiny and sanctions as tensions in the Persian Gulf region persist. Meanwhile, in China, President Xi Jinping intensified a sweeping purge of senior military leadership, incl. the removal and investigation of top generals from the People’s Liberation Army, signaling a consolidation of power and raising questions about institutional stability and the future direction of China’s defense establishment.

DOMESTIC ECONOMY:

Last week’s developments surrounding MSCI triggered heightened volatility in Indonesia’s equity market, after the index provider raised concerns over market transparency, governance standards, and the protection of minority investors, incl. stricter scrutiny on free float quality, investability, and potential market manipulation. The announcement prompted a sharp market reaction, with the benchmark index sliding significantly, as foreign investors reassessed risk and positioning. Authorities moved quickly to signal commitment to reforms, yet the situation intensified amid the resignation of the Chairman of Indonesia’s Stock Exchange (IDX/BEI) along with several board members of Indonesia’s Financial Service Authority (OJK), underscoring the gravity of governance issues at hand. Overall, the MSCI saga has become a pivotal moment for Indonesia’s capital market, highlighting the urgent need for structural improvements to restore credibility, investor confidence, and long-term market integrity.

Following the recent departures of senior regulators amid market turbulence, the leadership of Indonesia’s financial authorities has been refreshed to restore confidence and continuity; Friderica Widyasari Dewi has been appointed as Acting Chair of the Board of Commissioners of OJK, bringing experience in market conduct supervision, consumer protection, and financial education, while IDX leadership is being maintained through an interim director, Jeffrey Hendrik,  drawn from its existing board as the search for a definitive president director proceeds. Bonds market and IDR are steady during the week, as volatility persists only on the equity side (details of press conference points are in page 4 of this report).

DOMESTIC BOND MARKET:

Govt. bond ownership flow:

As of 29 Jan’26, banks recorded an outflow of -IDR12.4tn w-w to the govt. bonds, making up to IDR1,453tn or ~21.8% of total ownership in the govt. bonds. On the other hand, the central bank recorded an inflow of +IDR20.1tn w-w to the total of IDR1,561tn or ~23.4% of total ownership in the govt. bonds. From the non-bank investor classification, inflow was recorded at +IDR4.4tn w-w to the total of IDR3,661tn or ~54.8% ownership from total. Meanwhile, foreign investors saw an outflow of -IDR2.0tn w-w this week to the total of IDR879tn or ~13.2% of govt. bond ownership to total.

Important event next week

• Sat (31/01): (China) Manufacturing PMI
• Sun (01/02): –
• Mon (02/02): (USA) ISM Manufacturing, S&P Global US Manufacturing PMI, (China) RatingDog China PMI Mfg, (Indonesia) S&P Global Indonesia PMI Mfg, CPI YOY, (Eurozone) HCOB Eurozone Manufacturing PMI, (Japan) S&P Global Japan PMI Mfg
• Tue (03/02): –
• Wed (04/02): (USA) ISM Services Index, ADP Employment Change, MBA Mortgage Applications, (Eurozone) CPI MoM
• Thu (05/02): (USA) Initial Jobless Claims, (Indonesia) GDP YOY, (Eurozone) ECB Deposit Facility Rate, ECB Main Refinancing Rate, ECB Marginal Lending Facility
• Fri (06/02): (USA) Change in Nonfarm Payrolls, U. of Mich. Sentiment, Unemployment Rate

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