Fixed Income Daily Update - September 11, 2026

The ECB raised its policy rate by 25bps to 2.50%, turning more hawkish as renewed Middle East tensions pushed energy prices higher and lifted its 2026 inflation forecast to 3.0%. The move reinforces the higher-for-longer global rates backdrop, as persistent energy-driven inflation increasingly constrains central banks’ room to support growth.

U.S. PPI rose 0.4% MoM and 5.4% YoY in Aug-26, while core PPI was softer than expected at 0.2% MoM despite accelerating to 4.6% YoY. The mixed print keeps the Fed’s higher-for-longer bias intact, with markets pricing around a 64% probability of a Sep-26 hike and Friday’s CPI becoming the key catalyst for the near-term rate path.

The government plans to allocate IDR11tr to facilitate up to 200mn bank accounts, with implementation gradually rolled out through BRI and BSI. In our view, the initiative could accelerate financial inclusion and broaden the formal deposit base, although the macro impact will ultimately depend on whether new accounts translate into active savings and transactions.

Rupiah remained relatively stable at IDR17,547/USD, alongside a broadly stable DXY at 98.76, while INDOGB yields were also relatively steady at 7.11% for the 10Y and 6.83% for the 2Y despite elevated UST yields. With Indonesia’s 5Y CDS declining further to around 82, improving domestic risk sentiment and Rupiah resilience make medium-to-long INDOGB increasingly attractive for gradual accumulation, although elevated global rates still warrant selective duration positioning.