Chairman of the US Federal Reserve (Fed) by Jerome Powell the tight monetary policy needed to curb inflation last week. “problem” The fact that the Fed said it could create a financial opportunity has weakened the expectation that the Fed will take steps to ease markets, as it has done in the past.
Isabel Schnabel, a board member of the European Central Bank (ECB), reinforced Powell’s message by saying that central banks should fight effectively against inflation, even if it means dragging the economies of countries into recession.
While restrictive statements by central bank officials reduced buying appetite in the markets, S&P 500 futures contracts fell 1.1%. The S&P 500 Index fell 3.4% on Friday. Futures on the Nasdaq index fell 1.5% as prospects of slower economic growth pushed tech stocks lower.
CONCERNS GLOBAL RECESSION, EYES ON THE DATA AGENDA
This week, which consists of four trading days due to the holidays, will follow the intense internal data agenda and concerns about the global recession.
Today, the August Economic Confidence Index and July’s Foreign Trade Balance, the main data of which had previously been announced, will be announced.
Also among the data to follow this week are the gross domestic product (GDP) data for the second quarter, the PMI, ITO headline inflation, and the August Ministry of Commerce foreign trade data.
On the other hand, the markets are expecting the medium-term program (MTP), which Treasury and Finance Minister Nureddin Nebati has announced will be announced in the first week of September.
DOLLARO / TL BROUGHT THE PEAK IN JULY
While the decline in risk appetite in global markets supported the dollar, which investors view as a safe haven, the dollar index, which measures the dollar against six major currencies, passed its July peak with 109.40 and reached a new 20-year high.
After the CBRT rate cut, the Dollar / TRY climbed from 17.97 to as high as 18.1855. TL lost 1.2% in value against the dollar from the interest rate cut. Depreciation in TL is generally limited to 0.1-0.2% on a daily basis, excluding the day of the interest rate cut.
On a cumulative basis, TL has lost value by 18.3% since the end of April, by 27.5% since the beginning of the year and by 54% in the last year. TL had lost more than 40 percent in value last year.
While bankers define the functioning of the foreign exchange market as publicly controlled, they draw attention to the fact that they have recently taken steps to significantly increase public control over the bond and credit markets.
The decline in bond yields continues, which began with the CBRT rate cut and then continued exponentially with the loan and bond association.
The compound yield on the benchmark 10-year bond fell to 13% from 16.93% on the last transaction two weeks ago on Friday. The decline approached 400 basis points. Banks expect significant demand for Treasury TL denominated fixed coupon issues in September.
Dollar / TL started the week with a rise of 18.19. It is currently trading in the 18.18 range.
CBRT REDUCES THE REFERENCE INTEREST RATE TO 15.34 PERCENTAGE
On the other hand, the CBRT cut the benchmark interest rate by around 100 basis points to 15.34% for September last week.
After the benchmark rate cut last week, if some commercial loans cost more than 21.48 percent in September, the bank accounts for 20 percent of the loans; If the cost exceeds 27.61 percent, 90 percent of the loans will have to be set aside for bonds. These rates were 22.85% and 29.38% respectively in August.
The fact that the interest rates and growth rates of some commercial loans will require additional provisions for bonds is also being monitored closely in the markets.