What You Need to Know

Inflation Cools, But May Be Short-Lived

U.S. consumer prices dipped by 0.1% in March — the first monthly decline in nearly five years — driven by lower gas and used car prices. Core inflation rose 2.8% over the past year, the smallest annual increase since 2021. Import prices also declined, driven by lower energy import costs. However, this relief may be temporary, as upcoming tariffs are expected to push inflation back up.

The Fed Remains Cautious

Despite cooling inflation, the Federal Reserve is staying alert. Meeting minutes from March showed concerns about stagflation — where inflation rises while economic growth slows. Policymakers worry that Trump's new tariffs could drive prices higher, leaving the Fed with a tough choice: cut rates to support growth or keep them high to contain inflation.

Trump Escalates Tariffs, Markets React

President Trump recently raised tariffs on Chinese goods to 125%, triggering a sharp drop in global stocks and the U.S. dollar, while U.S. Treasury yields saw their biggest weekly jump since 2001. Days later, he paused the tariff hike for 90 days, spurring a rally in equity markets. But on April 16, he announced a further increase to 245%, keeping markets on edge.

📊 Simpan Views

Implications for Inflation and Fed Policy

While inflation appears to be easing, the full impact of new tariffs hasn’t yet been felt. Rising import costs may push inflation closer to 4%, though soft consumer demand could temper that rise. Markets now expect the Fed to begin cutting interest rates as early as June, with a total of 100 basis points in reductions likely this year to support growth amid trade tensions.

Our Strategy

  • In Equities, we continue to manage your portfolio with a focus on agility and awareness, recognizing that market movements are often driven by noise and uncertainty. With the Jakarta Composite Index (JCI) rallying following the temporary tariff pause, we’ve started redeploying cash into high-quality blue-chip and momentum-driven stocks. That said, we’re balancing this with prudent cash management to stay prepared for potential volatility.
  • Across our bond portfolios, we remain invested in short-duration bonds given heightened volatility in the US Treasury markets from the impact of Trump’s trade war. Furthermore, post Trump’s announcement, we saw 5-year and 10-year Indonesian bond yields decline.

Continue to Remain Invested

For current investors, our long-standing Dollar-Cost Averaging (DCA) approach remains key to optimizing returns over time. Our Sustainable Equity Fund also offers a compelling opportunity for long-term growth, especially with Indonesian equities still trading at attractive valuations.