The debt crisis which first appeared thirteen years ago, resurfaces as long-term government bonds face heavy selling pressure, pushing yields higher and refinancing costs to unsustainable levels. Even leading economies such as the U.S., Japan, the U.K., and France are under strain, leaving the ECB once again in crisis mode.

The sell-off at the long end of the yield curve has destabilized banks, pension funds, and insurers. Once seen as safe, long-term government bonds have lost credibility amid political and social turmoil. Investors are exiting into gold, cash, and strong currencies, accelerating Europe’s slide toward another debt shock.
 
Because banks hold vast amounts of sovereign debt, financial stability is directly at risk. The ECB’s toolkit — LTROs, TLTROs, liquidity operations, and Emergency Liquidity Assistance — offers temporary relief but depends on the same vulnerable assets at the heart of the crisis.

The ECB’s strategy remains yield control. Through programs such as PSPP, OMT, and the Transmission Protection Instrument, it intervenes — often discreetly — to suppress spreads and calm markets. Transparency is minimal, and the disciplining effect of free markets has all but disappeared under central bank management.
 
Typically, this would trigger outflow from Indonesia as investors are likely to seek safety to US market. However, since the Fed is aiming to lower its interest rates as the US try to manage their interest burden from the soaring debt which will mature this year, Indonesia has the advantage of not having the urgency to raise the interest rate in order to attract foreign capital.

Therefore, we remain bullish on JCI's big cap stocks which are sensitive towards interest rates such as bank stocks.