IDR: Stronger GDP Fails to Give Rupiah a Boost, Weakening Bias Remains

ACGBs (YM +1.0 & XM +1.0) are slightly stronger on another data-light session.

• Cash US tsys are 1-2bps cheaper in today's Asia-Pac session after yesterday's modest gains. Focus remains on US employment data this week: ADP on Wednesday, Nonfarm payrolls for December on Friday.
• Cash ACGBs are 1bp richer with the AU-US 10-year yield differential at +61bps.
• The bills strip is slightly weaker, with pricing -1 to -2 across contracts.
• RBA-dated OIS pricing shows tightening across all meetings, with the probability of a 25bp hike rising from 36% for February to 101% by June and 165% by December 2026.
• Tomorrow, the local calendar will see new complete November CPI data. It is forecast to show some moderation but remain above 3%. While the quarterly data on 28 January will be the decisive input into the 3 February RBA decision, the new monthly headline and services have a very close fit with the previous monthly CPI series.
• However, the new trimmed mean will need some time for not only the seasonal adjustment factors to emerge but also the trend as there is currently very limited history. If trimmed mean inflation holds at 3.3% or rises further then the market may bring forward the rate hike priced in for June.

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NZGBs closed with benchmarks 3-4bps richer after another data-light session. 

• Cash US tsys are 1-2bps cheaper in today's Asia-Pac session after yesterday's modest gains. Focus remains on US employment data this week: ADP on Wednesday, Nonfarm payrolls for December on Friday.
• The local data calendar is very light this week. Next week we get Nov filled jobs, along with food prices as well.
• NZ house prices may rise over the next 12 months after falling for two straight years, according to property consultancy Cotality. Prices fell 1% in 2025 after dropping 2.7% the previous year, and Cotality's home value index fell 0.2% from November to December.
• (Bloomberg) NZ ended 2025 with the highest stock of houses for sale since 2014, according to the nation’s largest property listing website realestate.co.nz. Inventory of properties listed on realestate.co.nz rises 3.1% y/y in December to 30,390.
• Swap closed showing a bull-steepener, with rates 1-3bps lower.
• RBNZ-dated OIS pricing is little changed across meetings. No tightening is priced for February, while October 2026 assigns 21bps.

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Bank Indonesia cut rates at three consecutive meetings in Q3 last year but was then on hold through Q4 as the rupiah weakened and its focus returned to FX stability. With the transmission of previous easing to lending rates very slow, the bank feels it can watch and wait. Its next decision is on 21 January and is likely to be on hold given Q1 headline inflation is expected to rise due to fresh food and base effects and USDIDR is trending higher again.

• December inflation printed well within BI’s 1.5-3.5% band but was higher-than-expected with headline up 0.2pp to 2.9% and while core was stable at 2.4% for the third straight month, it is above August’s trough.
• Inflation is unlikely to be a concern to BI but it is likely to be aware of the optics if it cuts rates while it is rising and the rupiah weakening.
• JP Morgan estimates a core CPI excluding gold which softened further in December to 1.2% y/y from 1.3%. Given that global gold prices rose almost 65% over 2025, it has significantly impacted jewellery prices.
• JP Morgan is forecasting BI to be on hold in Q1 with two 25bp rate cuts in Q2 dependent on a stronger rupiah. The drop out of 2025’s electricity discounts from the CPI should drive headline to rise to 4.6% y/y in February 2026.
• Fresh food prices have been boosted by the sharp rise in the take up of the government’s free school meal programme. With the increase in funding for the programme in 2026, JP Morgan sees a risk that it could “contribute to sticky food inflation this year”.