Between the Fed’s inflation and recession dilemma, uncertainties regarding the future monetary policy continue.
According to the data released in the country yesterday, although the increase in the Consumer Price Index (CPI) fell from 6 percent to 5 percent on an annual basis, leaving behind expectations, the increase in the core CPI from 5.5 percent to 5.6 raised the question marks. .
On the other hand, the mixed signals given by Fed officials about policies make pricing difficult.
Richmond Fed President Thomas Barkin stated that inflation is slowing but still not falling in line with the Fed’s 2 percent target. Stating that a few more months is needed for inflation to return to the targets, Barkin noted that he has yet to see any evidence that inflation has “broken” despite the cooling in demand.
San Francisco Fed President Mary Daly said further policy tightening may be needed to keep inflation down, but there are good reasons to think the economy could continue to slow without interest rate hikes. Stating that he expects inflation to be slightly above 3 percent at the end of the year, Daly said that policy tightening has reached a point where they do not expect any rate hikes at each meeting.
On the other hand, the Fed minutes released yesterday revealed that it evaluated keeping the interest rate constant at the March meeting, but the latest decision was to increase it by 25 basis points. In the minutes, it was reported that Fed officials forecast a mild recession at the end of the year, given the potential effects of the latest developments in the banking sector.
With these developments, expectations in the money markets that the Fed will raise interest rates by 25 basis points at the next meeting continued to be priced at 70 percent.
It was observed that the movements in the bond markets and commodity prices were squeezed into a narrow band, while the stock markets closed the day with depreciation due to recession concerns.
Yesterday, the S&P 500 index fell 0.41 percent, the Dow Jones index fell 0.11 percent and the Nasdaq index fell 0.85 percent in the New York stock market. Index futures contracts in the USA started the new day with a limited rise.
While the upward trend in European stock markets stood out yesterday, the data released today pointed out that the inflation in the region remained strong.
Accordingly, the increase in CPI in Germany was 7.4 percent in March, in line with the expectations. Industrial production in the UK, on the other hand, slowed less than anticipated.
While the European Central Bank (ECB) is expected to raise interest rates by 25 basis points at its next meeting, the possibility of a 50 basis point increase in interest rates was also included in the pricing.
While the expectations that the Bank will increase interest rates by 75 basis points in total until September and end the interest rate hike cycle are gaining strength, it is estimated that uncertainties regarding the size of the steps to be taken may continue for a while.
Yesterday, the DAX 40 index rose 0.31 percent in Germany, the FTSE 100 index rose 0.50 percent in the UK, the MIB 30 index rose 0.38 percent in Italy and the CAC 40 index rose 0.09 percent in France. Index futures contracts in Europe started the new day with a mixed course.
While a mixed course is prominent in the Asian stock markets today, the news that SoftBank, one of the important banks of Japan, will sell its share in the Chinese technology giant Alibaba, has an impact on the course in question.
On the other hand, the record-breaking depreciation of the Chinese construction company Sunac, despite the fact that it was put into operation after about a year, also negatively affected the risk appetite.
According to the macroeconomic data announced in the region, exports in China increased by 14.8 percent year-on-year in March, while imports decreased by 1.4 percent. The country’s foreign trade surplus in March was 88.2 billion dollars.
While the Nikkei 225 index increased by 0.2 percent in Japan near the closing, the Shanghai composite index in China decreased by 0.4, the Kospi index in South Korea by 0.1 percent and the Hang Seng index in Hong Kong decreased by 0.8 percent.
BIST 100 index in Borsa Istanbul, which followed a buying-heavy course in the domestic market yesterday, finished the day at 5,146.11 points, 0.43 percent above the previous closing.
Dollar/TL is traded at 19.3230 at the opening of the interbank market today, after closing at 19.3147 with an increase of 0.2 percent yesterday.
Analysts stated that today, the private sector’s foreign loan debt, weekly money and bank statistics, and abroad, unemployment benefits in the USA and Producer Price Index (PPI) data will be followed, technically speaking, the levels of 5,150 and 5,200 in the BIST 100 index are resistance, He noted that 5,050 and 5,000 points are in the support position.
The data to be followed in the markets today are as follows:
10.00 Türkiye, foreign loan debt of the private sector in February
12.00 Euro Zone, industrial production in February
14.30 Türkiye, weekly money and bank statistics
15.30 US, weekly jobless claims
15.30 US, March PPI