Today’s highlights:
Markets got major relief, with US top officials expecting de-escalation with China. Bessent saw the on-going triple digit tariffs to be unsustainable. However, large deals may take 2—3yrs. From Trump himself, he anticipated no “hardball” negotiation, while he had no intention to fire Powell. With this major de-escalation, we reiterated our call on BI-Rate cut (TRIM: 5.50%, cons: 5.75%, prev: 5.75%), as data suggested the needs to spur growth, with concerns on flows likely toning down.
From the bond market, FR 81, 40, 84, and 83 are currently the cheapest based on our yield curve model. Last national business day, the dollar index was closed at 99.92 (+0.7%). Rupiah was depreciated by 0.3% at USDIDR at 16,860. The UST yield was down by -1.0bps to 4.40% and 10yr INDOGBR was up by +2.3bps to 6.99% – the spread between the two was at 259bps.
Economy: Bessent expected tension with China to de-escalate
According to US Treasury Secretary Scott Bessent, the on-going tariffs—US’s 145% and China’s 125%—was not sustainable. While the tensions could cool down a few months ahead, dealing with larger issues would take 2—3yrs. On another note, Trump said that US was doing “just fine” with China, and he anticipated no “hardball” negotiation. Source: Bloomberg
Economy: Trump had no intention to fire Powell
Speaking to reporters, Trump expressed his desire for Powell to be more proactive in considering rate cuts. The President remarked that it was the perfect time to lower interest rates, emphasizing that it’s better to act early or on time rather than too late. Previously, US National Economic Council stated that Trump had explored whether he could fire Powell or not. Source: Bloomberg
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Research Division
PT Trimegah Sekuritas Indonesia, Tbk.
