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Weekly Insight

Trade Tension Impact

13 October 2025
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Trade Tension Impact

Global Markets

Geopolitical tensions between the U.S. and China escalated, following President Donald Trump’s threat to impose an additional 100% tariff on Chinese goods effective November 1, 2025. In response, China announced export restrictions on rare earth metals, intensifying fears of a renewed trade war. This pushed investors toward safe-haven assets, particularly U.S. Treasuries. Federal Reserve officials, including Christopher Waller and Mary Daly, signaled cautious support for further monetary easing while highlighting early signs of labor market softening.


Indonesian Markets

Domestically, Indonesia’s local currency bond market strengthened as global risk sentiment improved and domestic liquidity remained abundant. Government bond yields declined across the curve, with the 10-year benchmark yield dropping 20–21 bps to around 6.09–6.12%, and the 5-year yield down 9 bps to 5.38%. The Jakarta Composite Index (JCI) rose 1.7% WoW to a record 8,258, led by conglomerate and commodity stocks. The Rupiah slightly weakened to IDR 16,570/USD, remaining broadly stable as Bank Indonesia was expected to provide liquidity support via open market operations.


Weekly Highlight on Economic Indicators


Our Take:

The past week was dominated by renewed U.S.–China trade tensions, a prolonged U.S. government shutdown, and mounting expectations for Fed rate cuts, all of which drove a global bond rally. In Indonesia, stable domestic liquidity, robust auction demand, and controlled inflation helped sustain the bond market rally and maintain positive sentiment in equities, despite ongoing foreign outflows from the banking sector.

The recommendation for investment to our investors (in order):
Fixed Income Fund > Equity Fund > Balanced Fund > Money Market Fund.


Author : KBVAM Investment Team

Source: Bloomberg, Infovesta, Trading Economics

DISCLAIMER :
INVESTMENT THROUGH MUTUAL FUNDS CONTAINS RISKS. PROSPECTIVE INVESTORS MUST READ AND UNDERSTAND THE PROSPECTUS BEFORE DECIDING TO INVEST THROUGH MUTUAL FUNDS. PAST PERFORMANCE DOES NOT REFLECT FUTURE PERFORMANCE.

This document was prepared based on information from reliable sources by PT KB Valbury Asset Management. PT KB Valbury Asset Management does not guarantee the accuracy, adequacy or completeness of the information and materials provided. PT KB Valbury Asset Management Indonesia is not responsible for any legal and financial consequences arising, whether against or suffered by any person or party and in any way deemed to be a result of actions taken on the basis of all or part of this document.