Considering global developments, high inflation and recession concerns continue to be the main item on the agenda. In an environment where recession fears continue, expectations for the Fed’s rate cut start date are pushed forward with each passing week.
Bond investors are pricing in the turnaround from the Fed’s tightening policy that will begin in mid-2023. A month ago, traders expected the Fed’s policy rate range to peak at more than 4%. Today, the peak is expected to be around 3.3% in the first quarter of 2023. Bond traders expect the policy rate to hit 2.7% at the end of the year, with a series of rate cuts following this peak. .
The minutes of the June meeting, where the Fed raised interest rates by 75 basis points, will be released tonight at 9pm. The recession theme is still influencing prices today. As the dollar maintains its strong course in global markets, sales of risky assets continue.
THE DOLLAR DOES NOT LEAVE THE PEAK
While US bond markets followed a heavy buying course yesterday, the difference between the yield on US 10-year bonds and 3-month Treasury bills fell below 100 basis points for the first time since January 2021, falling at 0.99%. While the dollar index rose to 106.8, its highest level since October 31, 2002, following increased demand for dollars, concerns are expected to continue to support dollar demand. After the dollar index fell yesterday to its highest level in 20 years, the euro / dollar parity fell to its lowest level since December 2022 at 1.0235. The sterling / dollar parity fell to 1.1898, the lowest level since March 26, 2020. On the day that the currencies of the countries in the region regressed against the dollar, a sales-oriented trend was also observed in the bond markets.
THE LOSS OF VALUE OF THE TURKISH LIRA CONTINUES TODAY
With these developments, as the dollar strengthens on the global side, the latest inflation rate continues to suppress the TL in the domestic market. While inflation and interest rate spreads have approached 65 percent and opened record-breaking, the Central Bank is not expected to change interest rates, depending on the new model implemented. After closing at 17 TL with a 1.1% rise yesterday, the Dollar / TRY gained more than 1% and topped 17.20 today. The exchange rate hit its highest level on June 24 after the BRSA’s decision to limit commercial lending.
ONS GOLD UNDER $ 1800
On the other hand, the ounce of gold fell to the $ 1,766 level as US bond yields rose from yesterday’s $ 1812 and the market waits for the Fed minutes to be released today. Analysts said the upside reaction movements below the ounce continue to be limited and the overall trend is down.
HAVE GIVEN NUMBERS FOR PURCHASE OPPORTUNITY UNDER GRAM
Although there is an upside on the dollar / TL side below the grams, the weak outlook on the ounce gold side and the breakout of major support levels are limiting upward price movements. Although yesterday there was a rise to the highest level of 988 TL by sub gram, permanence could not be guaranteed and there was a retreat to levels of 964 TL. Today the gram of gold meets the buyer at 976 lire.
COMMENT OF GOLD AND DOLLARS OF ISLAM MEMİŞ
Making a critical assessment of the markets, Gold and Money Markets Islam Memiş stated:
“The dollar index is currently at 106. Commodities and parities have severely plummeted against the dollar. The price of one ounce of gold is at the $ 1776 level. And so this suppression has been going on over the past year. The world buys gold cheap, but we buy it at a high price. Because the dollar rate increases the gram of gold. Grams of gold fluctuates in the range of 977-985 lire. He is still high because he started the year at 780 lire. Considering this suppression, the price of gold in the ounce is at very low levels. And when we look at the remainder of the year, I expect rapid recoveries and price increases in gram gold / TL. There is no change in my forecast of 1400 TL at the end of the year. Therefore, those holding dollars should value the dollar or gold portion as follows … The dollar index rose from 86 to 106. An ounce of gold fell sharply from 2053 to $ 1772. You need to ask yourself about this, should I buy something that has increased in value or something that has lost value? It is very cheap to buy gold with dollars right now. In my opinion, the price of TL gold gram is also very cheap.