Weekly Market Review

Global Update

• Global markets closed higher last week, with the S&P500 and Dow Jones rising by +1.6% and +1.0% WoW, respectively, while the MSCI Asia ex-Japan gained +4.4% WoW. The strengthening of the U.S. stock market was supported by economic data that increased the likelihood of a Fed rate cut in the September meeting, driven by a slowdown in the U.S. Producer Price Index (PPI), which came in below expectations in August, and higher-than-expected jobless claims.
• On the domestic side, the JCI closed slightly lower by -0.2% WoW last Friday, experiencing high volatility throughout the week amid the reshuffle of several ministers and new policies from the newly appointed Minister of Finance, Purbaya Yudhi Sadewa, who plans to increase banking liquidity. The strongest gains were recorded in the Healthcare (+2.4% WoW) and Industrials (+1.9% WoW) sectors, while the weakest performance was seen in Technology and Infrastructure, which declined by -3.9% and -2.3% WoW, respectively.
• Key events to watch this week include: the U.S. FOMC meeting, U.S. initial jobless claims, and Indonesia’s interest rate decision.
• The rupiah strengthened by +0.3% WoW last Friday to IDR 16,378/USD, relatively weaker compared to the average performance of other EM currencies. Meanwhile, the DXY index weakened by -0.2% and closed at 97.6.
• The Indonesian government bond (SBN) market closed stronger last week, with yields showing a bull-steepening move, where short-tenor yields fell more sharply than long-tenor yields. Market volatility spiked after the appointment of the new Finance Minister, Purbaya Yudhi Sadewa, former Chief Commissioner of the Deposit Insurance Corporation (LPS), replacing Sri Mulyani Indrawati, who was known for her fiscal discipline during 14 years of service across three presidential terms. Although initially causing a shock, sentiment eased after the new Finance Minister took steps to reallocate IDR 200 trillion from the government’s account balance (SAL) at Bank Indonesia to Himbara banks to boost liquidity, which has been a growth bottleneck. As of September 12, 2025, the 10-year government bond (SUN) yield closed at 6.33% (-6 bps WoW).
• Total incoming bids in the conventional auction reached IDR 79.6 trillion, down from IDR 126 trillion previously. The largest demand came from the FR109 (5-year) and FR108 (10-year) series, contributing more than 65% of the total demand. The government issued IDR 24.45 trillion, below the target of IDR 27 trillion.
• Based on DJPPR data as of September 10, 2025, total foreign ownership in SBN stood at IDR 935.6 trillion, or 14.64%.
• The U.S. bond market closed mixed last week, with yields moving between -8 bps and +5 bps across the curve. Markets are now almost fully pricing in a 25 bps Fed rate cut next week, with a probability of 93.4%.
• This sentiment was supported by U.S. producer inflation (PPI) data, which declined for the first time in six months (-0.1% m-m vs consensus +0.3%). Several components included in the PCE inflation calculation also slowed, such as airline services and portfolio management fees. Although the latest consumer inflation (CPI) came in slightly above expectations (+0.4% m-m vs consensus +0.3%), Core CPI matched forecasts (+0.3%), still leaving room for the Fed to ease monetary policy. As of September 12, 2025, the 10-year U.S. Treasury yield closed at 4.06% (-1 bps WoW).

Global News

• U.S. consumer inflation (CPI) in August stood at 2.9% YoY, in line with expectations but higher than the previous month’s 2.7% YoY.
• U.S. producer inflation (PPI) in August came in at 2.6% YoY, below consensus expectations and the previous month’s 3.3% YoY.
• U.S. initial jobless claims for the week ending September 6 reached 263k, higher than expectations of 235k and the previous week’s 237k.
• U.S. consumer sentiment in September is projected at 55.4, lower than the consensus forecast of 58.
• China’s consumer inflation (CPI) in August remained in deflation territory at -0.40% YoY, below the consensus expectation of -0.2% YoY.
• China’s trade balance in August recorded USD 102.33 billion, an increase from the previous month’s USD 98.24 billion. Both exports and imports slowed compared to the previous month, with growth of +4.4% YoY and +1.3% YoY, respectively.
• China’s money supply (M2) in August rose to 8.8% YoY, above the consensus forecast of 8.6%, but unchanged compared to the previous period’s figure.

Domestic News

• Indonesia’s foreign exchange reserves in August stood at USD 150.7 billion, slightly lower than the previous month’s USD 152 billion.
• Last week, the Ministry of Finance injected IDR 200 trillion of liquidity into state-owned banks. Finance Minister Purbaya Yudhi Sadewa emphasized that the funds should not be used to purchase government securities or Bank Indonesia rupiah securities (SRBI), but instead be channeled as credit to stimulate economic activity.
• Wholesale car sales in August 2025 were recorded at 61,780 units, down -19% YoY compared to 76,302 units in August 2024.

EM Equities Net Foreign Flow