Fed expected to begin interest rate cuts by May at the latest next year

Concerns that the world economies might remain trapped in a vice of inflation and recession, which emerged following the inflation problem that has persisted since last year, are also gradually being priced out.

While the downward trend in US inflation continues to create room for policymakers, Fed officials continue their forward guidance.

Accordingly, Atlanta Fed President Raphael Bostic stated that there is no urgency for a rate cut, but noted that this has not significantly affected market expectations; he expressed that he expects the Fed to cut rates twice in the second half of next year, though there is no active discussion on this matter.

Richmond Fed President Thomas Barkin gave "dovish" signals, suggesting that the bank would lower interest rates if the recent progress in inflation continues.

At the beginning of the week, Chicago Fed President Austan Goolsbee and Loretta Mester from the Cleveland Fed had stated that it was too early for interest rate cut expectations.

Analysts stated that the personal consumption expenditures data, which the Fed closely monitors as an inflation indicator and is set to be announced tomorrow, could increase volatility in asset prices, and reported that the forward guidance of bank officials is expected to continue to be influential on the direction of the markets.

In money market pricing, while it is considered certain that the Fed will keep interest rates steady at its first meeting next year, the probability of the bank starting interest rate cuts in March has risen to 76 percent.

On the macroeconomic data front, the number of new housing starts in the US increased by 14.8 percent monthly in November to 1 million 560 thousand, exceeding market expectations and reaching its highest level in 6 months.

While a search for direction is prominent in bond markets, the US 10-year bond yield is hovering near its lowest level since July at 3.91 percent.

Following these developments, the dollar index, which completed the day yesterday with a 0.4 percent decrease at the 102.2 level, is currently just below its previous close, while the ounce price of gold is trading at 2 thousand 41 dollars, just above its previous close, extending its upward trend to the third consecutive trading day.

The barrel price of Brent oil, which extended its upward trend to the sixth consecutive trading day yesterday due to disruptions in the Red Sea, completed the day with a 1.8 percent increase at 79.7 dollars, while it is currently hovering at 79.2 dollars, a 0.6 percent decrease compared to its previous close.

In the New York stock market yesterday, the Nasdaq index gained 0.66 percent, the S&P 500 index 0.59 percent, and the Dow Jones index 0.68 percent. Index futures in the US also started the new day with a positive trend.

European stock markets also followed a positive trend yesterday.

Analysts reminded that developments regarding international logistics disruptions due to regional risks in the Red Sea are being closely monitored, and noted that a busy data agenda, primarily inflation in the UK, has become the focus of investors today.

The Consumer Price Index (CPI) in the UK is expected to show a monthly increase of 0.2 percent and an annual increase of 4.3 percent in November.

According to data released yesterday, the CPI in the Eurozone fell by 0.6 percent on a monthly basis in November, while it recorded a 2.4 percent increase on an annual basis.

On the other hand, the euro/dollar parity, which completed the day yesterday with a 0.5 percent increase at the 1.0980 level, is currently at 1.0970, 0.1 percent below its previous close.

While European Central Bank (ECB) officials continue their forward guidance, ECB member Martins Kazaks stated in his remarks yesterday that the policy rate should remain at these levels for some time.

Francois Villeroy de Galhau expressed that the bank could begin interest rate cuts in 2024.

Yesterday, the MIB 30 index in Italy rose by 0.41 percent, the CAC 40 index in France by 0.08 percent, the DAX 40 index in Germany by 0.56 percent, and the FTSE 100 index in the UK by 0.31 percent. Index futures in Europe also started the new day with a positive trend.

In Asia, a positive trend stands out except for China, and the fact that the Bank of Japan (BoJ) did not change its ultra-loose monetary policy yesterday supports risk appetite.

Following the BoJ's decision yesterday to keep the policy rate steady at minus 0.1 percent, as it remains the last central bank to implement a negative interest rate policy, the rise led by export companies in Japan was particularly notable.

Today, the People's Bank of China (PBoC) also kept the one-year and five-year loan prime rates steady at 3.45 percent and 4.2 percent, respectively, for December.

According to data released today, Japan's exports in November declined for the first time in the last three months, while the foreign trade deficit exceeded expectations at 776.9 billion yen.

The dollar/yen parity, which extended its upward trend to the third consecutive trading day yesterday, completed the day with a 0.7 percent increase at the 143.9 level, while it is currently at 143.6, 0.2 percent below its previous close.

Near the close, the Nikkei 225 index in Japan gained 1.5 percent, the Hang Seng index in Hong Kong 1.1 percent, and the Kospi index in South Korea 1.6 percent, while the Shanghai composite index in China lost 0.4 percent of its value.

Domestically, the BIST 100 index in Borsa Istanbul, which followed a sales-weighted trend yesterday, completed the day with a 0.83 percent loss at 7,725.86 points.

The dollar/TL, after following an upward trend yesterday and closing the day at 29.0935, 0.1 percent above its previous close, is trading at the 29.0950 level at the opening of the interbank market today.

On the other hand, international credit rating agency Moody's reported in its "Credit Opinion" report on the Turkish economy published yesterday that Turkey's credit rating outlook could be revised to positive if the tight monetary stance is maintained.

The report stated that the return to more orthodox policies after the May elections is positive in terms of credit, but noted that it will take time to reduce significant macroeconomic imbalances.

Analysts stated that a busy data agenda, primarily the consumer confidence index domestically and inflation in the UK and the CB consumer confidence index in the US abroad, will be followed today, and noted that technically, 7,700 and 7,600 points are support levels, while 7,800 and 7,900 levels are resistance positions for the BIST 100 index.