Expectations that the Fed will continue its ultra-hawkish monetary policies in the fight against inflation continue to be the main factor that guides the markets. While this situation increased the volatility in the stock markets, with the acceleration of the escape from the bond markets, the US 2-year bond yield with 3.97 percent was the highest since October 2007 and the 10-year bond interest rate with 3.51 percent since April 2011. saw the level.
Şahin Fed expectations and recession concerns, as well as global dollar demand, remained strong. The dollar index was stabilized at 109.7 today, after rising to levels close to the highest level of the last 20 years with 110.2 yesterday. With the rise in the dollar index, the ounce price of gold was below $ 1.660 yesterday, while it is trading at $ 1.675 today. On the other hand, the barrel price of Brent oil is trading at $ 91.1 today, after falling to an 11-day low of $ 87.6 yesterday.
Currently, in the money market pricing, the probability of the Fed's rate hikes of 75 and 100 basis points is 82 percent and 18 percent, respectively. For the bank's meeting next month, the highest probability is given to a 50 basis point rate hike with 61 percent.
Despite these developments, the desire to recover in the New York stock market came to the fore yesterday with the pricing of aggressive interest rate hikes and buying from the bottom. The Dow Jones index gained 0.64 percent, the S&P 500 index gained 0.69 percent and the Nasdaq index gained 0.76 percent. It is noteworthy that index futures contracts in the USA started the new day with a rise.
While inflation concerns, which increased in parallel with the energy crisis in Europe, remain at the center of the agenda, recession expectations regarding the regional economies are also increasing. While it was stated that the contraction in the economies may accelerate with the increasing use of natural gas as we enter the winter months, expectations that the Bank of England (BoE), which will announce its interest rate decision on Thursday, may increase by 75 basis points increased. Although there is a stronger possibility in the markets that the bank will increase the interest rate by 50 basis points, the predictions that it will follow the Fed by taking a more hawkish step with 75 basis points have approached 50 percent.
With these developments, the indices in the European stock markets, which fell to the lowest level in two months yesterday, recovered with the purchases that came close to the closing. While the DAX 40 index increased by 0.49 percent in Germany and the MIB 30 index increased by 0.13 percent in Italy, the CAC 40 index decreased by 0.26 percent in France. While the euro/dollar parity went above 1, the index futures contracts in Europe started the new day with a rise.
On the Asian side, the People's Bank of China, which lowered the 14-day reverse repo rate yesterday, did not change the reference base loan rate, which is 3.65 percent today.
Inflation data were followed closely in Japanese markets, which were not traded yesterday due to the holiday. The core Consumer Price Index (CPI), which rose 2.4 percent in July, recorded its fastest rise since October 2014 with 2.8 percent in August. In the same period, the headline CPI increased by 3 percent to its highest level since 1991.
Despite the inflation data that exceeded expectations and remained above the Bank of Japan's (BoJ) target for the last 5 months, analysts predict that the bank will not abandon its ultra-loose policy as long as wage and consumption growth remains weak. Analysts said that the data revealed the dilemma faced by the BoJ as it tries to support a fragile economy by maintaining extremely low interest rates, and said that this situation brought about a decline in the Japanese yen.
Despite these developments, it was observed that the new day started positive in Asian stock markets, which took over the positive mood in the US stock markets yesterday, while the Shanghai composite index was 0.1 percent in China, the Nikkei 225 index was 0.4 percent in Japan, and the Hang Seng index was 1 percent in Hong Kong.
While the index-linked circuit breaker system was working with the widespread spread of sales in the banking sector in Borsa Istanbul yesterday, the BIST 100 index closed at 3,199.54 points with a 5.26 percent depreciation. Dollar/TL, on the other hand, is traded at 18.2980 at the opening of the interbank market today, after closing at 18.2853 with an increase of 0.2 percent yesterday.
Analysts said market volatility could continue before the aggressive rate hikes expected from central banks this week.
Emphasizing that the interest rate and economic indicator forecasts that will be updated with the verbal guidance of Fed Chairman Jerome Powell, as well as the interest rate decision at the Fed's tomorrow meeting, are of critical importance, analysts noted that the activity in the bond market should also be carefully monitored.
Analysts stated that the Producer Price Index (PPI) in Germany, construction permits and housing starts in the USA came to the fore in today's data agenda, and reported that 3,150 points in the BIST 100 index were technically support and 3,440 and 3,500 levels were resistance.
The data to be followed in the markets today are as follows:
09.00 Germany, August PPI
10.00 Turkey, August abroad PPI
11.00 Euro Zone, current account balance for July
15.30 US, August building permits and housing starts
17.30 Turkey, August central government debt stock