All eyes on the Central Bank's interest rate decision in Turkey! What do economists expect?

Following last week's US inflation data coming in below expectations, pricing for a potential Fed interest rate cut in September has strengthened. Investors are now focused on the Fed's upcoming policy meeting minutes, to be released on Wednesday, as well as intensive verbal guidance from Fed officials throughout the week.

In the US, the Consumer Price Index (CPI) rose by 0.3 percent on a monthly basis in April, below expectations, while it increased by 3.4 percent annually, in line with forecasts. The CPI had risen by 0.4 percent monthly and 3.5 percent annually in March.

Analysts noted that Fed Chair Jerome Powell and other bank officials provided "cautious" guidance last week, adding that they will be looking for clues regarding the bank's future steps in this week's verbal guidance and the minutes of the Fed's latest meeting.

Following these developments, market pricing suggests a 65 percent probability that the Fed will make its first interest rate cut in September.

Meanwhile, the US 10-year Treasury yield, which closed at 4.42 percent on Friday with a rise of about 4 basis points, started the new week at 4.41 percent.

Today, the ounce price of gold hit a record high, rising 1.4 percent from its previous close to $2,450, while the dollar index is hovering at 104.4, down 0.1 percent.

Developments in the Middle East are being closely monitored, as Iranian state television announced that Iranian President Ebrahim Raisi and Foreign Minister Hossein Amir-Abdollahian lost their lives in a helicopter crash.

Additionally, according to the Saudi Press Agency, it was announced that King Salman bin Abdulaziz of Saudi Arabia will undergo treatment for a lung condition.

With these developments, the price of a barrel of Brent crude oil, which has been on an upward trend for the fourth consecutive trading day, is trading at $83.9, up 0.2 percent, while the price of copper per pound, which gained over 10 percent last week to close at $5.13, is currently finding buyers at $5.16, up 0.6 percent.

On Friday, the Nasdaq index in the New York stock market fell by 0.07 percent, while the S&P 500 index rose by 0.12 percent and the Dow Jones index by 0.34 percent. The Dow Jones index thus closed above 40,000 points for the first time in history. US index futures also started the new week on a positive note.

European stock markets saw a negative trend on the last trading day of last week, and investors are now focused on the busy data agenda to be released in the region this week.

Analysts stated that data indicating that economic activity in the region has not lost as much momentum as feared and that inflation is slowing within forecasts has eased the policy space for the European Central Bank (ECB).

Following these developments, while it is considered certain that the ECB will cut interest rates next month, pricing in money markets points to a total of three interest rate cuts by the bank this year.

Analysts, noting that inflation data in the UK and growth data in Germany, as well as the minutes of the ECB's last meeting, could increase volatility in the markets this week, said that this data could provide signals regarding the steps central banks will take in the coming period.

On the other hand, there will be no trading in equity markets in the Eurozone today due to a holiday.

On Friday, the FTSE 100 index in the UK fell by 0.22 percent, the MIB 30 index in Italy by 0.03 percent, the DAX 40 index in Germany by 0.18 percent, and the CAC 40 index in France by 0.26 percent. Index futures in Europe started the new week on a positive note.

A positive trend prevails in Asian equity markets, and today the People's Bank of China (PBoC) kept its one-year and five-year benchmark loan prime rates (LPR) unchanged at 3.45 percent and 3.95 percent, respectively, in line with expectations.

Analysts stated that the strong risk appetite in US equity markets has carried over to Asia, adding that investors are focused on the tertiary industry activity index, core machinery orders, foreign trade balance, and CPI data to be released in Japan during the week.

Meanwhile, the dollar/yen parity is continuing its upward trend for the third consecutive trading day, trading at 155.8 today, up 0.1 percent.

Near the close, the Nikkei 225 index in Japan rose 0.9 percent, the Kospi index in South Korea 0.6 percent, the Shanghai composite index in China 0.4 percent, and the Hang Seng index in Hong Kong 0.5 percent.

MARKETS EYE CENTRAL BANK'S INTEREST RATE DECISION

In Turkey, the BIST 100 index on Borsa Istanbul, which followed a buying trend on Friday, completed the day at 10,643.58 points, up 3.14 percent from the previous close, marking its all-time high close, while also pushing its record for the highest level seen to 10,652.28 points.

Analysts stated that the interest rate decision to be announced by the TCMB's Monetary Policy Committee (PPK) this week is at the center of investors' focus.

ECONOMISTS EXPECT INTEREST RATES TO REMAIN UNCHANGED

All economists participating in the AA Finance expectation survey expect the TCMB to keep the policy rate unchanged at 50 percent, while the median of economists' year-end policy rate expectations was calculated at 45 percent.

Meanwhile, Turkey's 5-year credit default swap (CDS) premium, which fell to its lowest level since February 2020 at 266.46 basis points last week, started the new week at 268.5.

The dollar/TL, which followed a selling trend on Friday and closed at 32.2051, 0.2 percent below its previous close, is trading at 32.2150 at the opening of the interbank market today.

Analysts noted that the data agenda abroad is quiet today, while the international investment position and foreign Producer Price Index (PPI) data will be followed domestically, adding that from a technical perspective, the 10,700 and 10,800 levels are resistance, and 10,600 and 10,500 points are support for the BIST 100 index.

Data to be followed in the markets today:

10.00 Turkey, March international investment position

10.00 Turkey, April foreign PPI

News Source: AA