Investor sentiment improved overnight as resilient US labor market data reinforced confidence that the economy continues to withstand tighter financial conditions. While job openings declined in June, hiring activity edged higher, suggesting labor demand remains healthy. Meanwhile, optimism over a potential US-Iran agreement continued to lift risk appetite, allowing Asian markets to extend Wall Street's gains — and today Wall Street hit fresh record highs: the Dow jumped 1.71% to 54,085.88, the S&P 500 rose 1.79% to a record close of 7,736.52, and the Nasdaq surged 2.59% to 26,584.99 on renewed tech/AI enthusiasm.
 

On the domestic front, Indonesia surprised to the upside with Q2 2026 GDP growth of 5.29% YoY, exceeding both market expectations and our forecast. Although growth eased from the previous quarter, the moderation was largely attributable to softer household consumption following the seasonal festive period. BPS confirmed household consumption and direct investment remained the main pillars of growth, while government spending posted the highest growth rate among all components, though its overall contribution stayed comparatively minimal. Adding to the picture, July inflation eased to 2.88% YoY, below expectations, as food inflation moderated while core inflation held stable — softer fuel prices and easing global oil should keep inflation contained, supporting our view that BI holds the BI-Rate in August, though renewed rupiah pressure in 4Q26 could still prompt another hike.
 

Markets are already reacting positively: IHSG opened up 0.30% to 6,338.59 and extended gains through session one, closing +0.69% to 6,363.01, building on yesterday's 1.37% rally. The rupiah strengthened 0.31% to Rp17,972/US$, snapping Tuesday's slide to Rp18,027, as pressure on the yen eased following coordinated BOJ/US intervention support. Even so, higher Pertamax prices remain a headwind, likely pushing up transportation costs and weighing on household spending as fiscal stimulus normalizes. Overall, we view the stronger-than-expected GDP print — reinforced by benign inflation and an improving trade composition — as a positive signal for Indonesia's macro outlook, supporting the rupiah, bonds, and domestic equities, especially sectors tied to investment and infrastructure spending.