- Despite their similarly downward growth trajectory, inflationary pressures seem to be returning to the US, threatening the economy with stagflation while China’s production overcapacity continues to breathe disinflation into the economy and the global south.
- Indonesia’s more inflation outlook explains the narrowing UST-SBN yield spread, lessening the adverse impact of the US’ volatile rate outlook on the SBN market.
- Alas, Indonesia may not benefit from the narrowing yield spread, given investors’ adverse reaction to signals of loosening fiscal control in Indonesia.