The Market is Bottoming: A Shift from RISK-OFF to RISK-ON Driven by U.S. Liquidity and Global Macro Tailwinds

Analyst: Marcelius Patria Prabaniswara

This evening, my macro indicators shot up (pict.2) significantly—clear signs that U.S. liquidity is ramping up. It’s an early signal of a potential bullish turn in the market, particularly for the short to medium term. The macro backdrop is aligning with technical and fundamental shifts, forming what I believe to be a solid bottoming phase.

Inflation recently came in lower than expected. But for those closely tracking the Citi Economic Surprise Index (CESI), this was far from surprising—it had already been flashing clues six months prior. The market’s reaction has been swift. As of now, investors are pricing in four consecutive rate cuts beginning in June. This is a major pivot in monetary policy, setting the tone for improved liquidity and a more favorable risk environment.

On the political front, Trump’s stance appears passive for now. He will wait for the U.S. 10-year yield to fall to 4% or lower before making bold economic moves in tariffs. Interestingly, the 90-day halt on tariffs has created a buffer of macro stability. This pause allows the market to absorb incoming liquidity from the anticipated rate cuts without new geopolitical shocks.

What we’re witnessing is the start of real liquidity flowing into the market—liquidity backed by actual productivity, not just debt expansion (pict. 3). That distinction matters. This kind of liquidity supports sustainable growth and typically signals the start of a more constructive market cycle. I believe we’re seeing the tail end of the bottoming process, supported not just by macro indicators, but also by clear technical and fundamental confirmations.

From a technical perspective, the VIX is topping (pict.4). Historically, this has always been a strong indicator of a market bottom. Fundamentals also paint a supportive picture. The SPY is trading at a price-to-earnings ratio of 27 (pict.5), with an annualized return expectation of 5.18%. That’s relatively attractive when compared to the U.S. 10-year yield currently at 4.3%. And when we factor in the expected 100 basis points in rate cuts, bringing the projected yield closer to 3.3%, the risk premium for equities becomes even more appealing. This supports the thesis that we are transitioning from a risk-off environment to a risk-on phase, especially in the eyes of global fund managers.

Now, you might ask—why talk about the U.S. macro landscape in the context of investing in Indonesia?

Because it matters more than most people realize. U.S. macro trends are deeply tied to foreign investor appetite, and for a market like Indonesia—where local investor participation is still under 5%, and the largest domestic fund manager controls only IDR 45 trillion in assets under management—foreign flows are everything. When U.S. liquidity improves and risk sentiment shifts, Indonesian blue-chip banks like $BBRI, $BBCA, and $BMRI start to look like attractive bargains. Their valuations are not just driven by local economic factors but also by external capital flow dynamics.

So while the old adage warns us to “Sell in May,” this time we might be seeing headlines that say “Buy in May.” And if you've been following closely, you know I’ve been pointing to this macro bottoming for some time now (pict.1).

For those looking to dive deeper into how the business cycle and macroeconomics affect investment decisions, I highly recommend watching this video. It’s not free, but it’s worth every penny:
https://cutt.ly/rrftbZHr

In conclusion, this isn’t just about numbers. It’s about recognizing shifts in sentiment, liquidity, and global positioning. We are at a pivotal point—where macro, technical, and fundamental forces align. It’s time to prepare, not retreat.

Good luck out there.