INDONESIA: Focus On Fallout After Long Term FinMin Replaced
Just a reminder in case you missed it, from late yesterday.
State minister Hadi confirmed that Sri Mylyani Indrawati has been removed from the post of finance minister as part of the reshuffle.
• The reshuffle follows the broad protests and scenes of violence across the country - and may signal a spell of near-term political uncertainty in Indonesia - particularly as Indrawati held the role of finance minister for the vast majority of the past 20 years - having first been appointed in 2005.
"*INDONESIA NAMES SADEWA AS NEW FINANCE MINISTER" - BBG
Shortly before the announcement, CNBC Indonesia and CNN Indonesia reported that 'Chairman of the Deposit Insurance Corporation (LPS) Board of Commissioners, Purbaya Yudhi Sadewa, was seen at the Presidential Palace in Jakarta on Monday afternoon'. Sadewa told reporters that he was unaware of the agenda of the meeting but 'came with his family' and would be ready to assume any role. His term as LPS Chairman was due to end this month.
USD/IDR 1mth NDF finished US trade above 16500 on Monday. Spot to play some catch up today, after finishing close to 16300 yesterday.
Offshore inflows 2025 to date for bonds and equities, see the chart below. Bond just off highs (the white line), equities negative but up from recent 2025 lows (the orange line on the chart). Such trends will be used to gauge market sentiment/reaction.
Fig 1: Indonesian Offshore Inflows For Bonds (White Line) & Equities (Orange Line) - YTD
Source: Bloomberg Finance L.P/MNI
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AUSSIE 10-YEAR TECHS: (U5) Recovers With Treasuries
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 14:34 BST Aug 8
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed a poor NFP print. This keeps Aussie 10-year futures toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
SECURITY: Trump To Sign Trilateral Peace Accord With Armenia/Azerbaijan Shortly
US President Donald Trump is shortly due to sign a trilateral peace agreement with Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev at the White House. LIVESTREAM The event will provide another opportunity for Trump to style himself as peacemaker, after touting success in brokering peace deals between Rwanda/Congo, Cambodia/Thailand, and India/Pakistan.
- The accord aims to resolve a decade-long dispute over the sovereignty of Nagorno-Karabakh - a breakaway Azerbaijani province that was under de facto Armenian control from the dissolution of the Soviet Union until a 2020 war.
- Trump described the meeting on Truth Social as a “historic peace summit,” noting that the US will also sign “Bilateral Agreements [to] fully unlock the potential of the South Caucasus Region.”
- White House spokeswoman Anna Kelly told reporters that Trump would sign deals with both Armenia and Azerbaijan on energy, technology, economic cooperation, border security, infrastructure and trade.
- A White House official said: "It's about the entire region, and [the leaders] know that that region is known to be safer and more prosperous with President Trump."
- Reuters reports that the US will have development rights to build transportation links in the strategic Zangezur Corridor, a mountainous stretch of Armenian territory between Azerbaijan and its Nakhichevan exclave.
- Politico notes: “But whether this is just a photo opportunity or a lasting end to a conflict that has undermined stability in a region dominated by Russia and Iran will depend on whether the US can address several key challenges.”
FED: Balance Sheet Runoff Continues At Steady $20B/Month Pace (2/2)
Fed asset holdings were little changed in the past week. SOMA runoff totaled $2.8B (composed of $4.2B less nominal Tsy holdings and $1.4B more TIPS), with emergency lending/liquidity facilities $0.7B lower.
- Over the last 4 weeks, the $20B/monthly expected QT pace was roughly adhered to: MBS fell $18B, with Treasury net holdings down around $2B (a fall in TIPS holdings offsetting a slight rise in nominals).
- Discount window usage accounted for the fall in lending facility usage this week; takeup is now down to $4.9B, down $1.3B in the last month and down from the 1-year high of $6.4B set in July which looks to have been a temporary blip higher.
