Global markets eye US inflation data

Although the Producer Price Index (PPI) released in the US rose by 0.5 percent on a monthly basis and 2.2 percent on an annual basis in September, the Consumer Price Index (CPI) data to be released today is projected to continue its decline.

However, the fact that the non-farm payrolls data released last week exceeded expectations has led investors to be cautious, while the minutes of the Fed meeting released last night revealed that high uncertainty regarding the economic outlook has pushed the bank to be cautious.

CAUTIOUS APPROACH AHEAD

The minutes, which stated that all Fed officials agreed that they are "in a position to proceed carefully," noted that officials were in agreement that monetary policy should remain restrictive for some time until they are confident that inflation is sustainably moving toward its target.

Fed Board of Governors member Christopher Waller stated that the tightening in financial markets could allow the Fed to "wait and see" what happens before taking further steps regarding interest rates.

Atlanta Fed President Raphael Bostic also stated that there is no need for the Fed to continue raising interest rates unless the decline in inflation stops, assessing, "I don't think we need to do anything more on interest rates today."

US Treasury Secretary Janet Yellen, in a press conference held within the scope of the IMF-World Bank annual meetings in Marrakech, Morocco, noted that the country's economy is on a good path, stating, "I think the base case for the US economy is a soft landing. There are, of course, risks to this, and global shocks are among these risks. I am not saying a soft landing is certain, but my view that this is the most likely path continues."

With these developments, the buying-weighted trend in bond markets remained strong yesterday as well, with the US 10-year bond yield falling to 4.56 percent, thus declining by approximately 24 basis points since the beginning of the week.

Expectations in money markets that the Fed will keep the policy rate unchanged next month continue to strengthen, with the market pricing in a 91 percent probability that the bank will not make any changes to interest rates.

Volatility continues in commodity markets. According to data released in the US last night, with oil inventories coming in well above the 1.3 million barrel increase estimate at 12.94 million barrels last week, the barrel price of Brent crude fell by approximately 2.2 percent to 85.1 dollars.

While the ounce price of gold rose to 1,880 dollars with a 0.3 percent increase today following a 0.7 percent rise yesterday, the statements of Fed officials and the search for a safe haven, which has strengthened with the rising tension in the Middle East, are effective in this trend.

With these developments, the Dow Jones index gained 0.19 percent, the S&P 500 index 0.43 percent, and the Nasdaq index 0.71 percent on the New York stock exchange yesterday. Index futures in the US also started the new day with a buying-weighted trend.

While a mixed trend stood out in European stock markets yesterday, developments in the Middle East are being followed closely.

According to the results of the ECB's Consumer Expectations Survey for August, the average inflation expectation of consumers in the Eurozone for the next 12 months rose from 3.4 percent to 3.5 percent in August, and the inflation expectation for the next 3 years rose from 2.4 percent to 2.5 percent.

Analysts stated that the increase in inflation expectations, albeit limited, has led investors to be cautious.

While the DAX 40 index in Germany gained 0.24 percent and the MIB 30 index in Italy gained 2.30 percent, the FTSE 100 index in the UK fell by 0.11 percent and the CAC 40 index in France by 0.24 percent. Index futures in Europe started the new day with gains.

While the buying trend in the New York stock exchange carried over to Asian equity markets on the new day, the fact that Central Huijin Investment, affiliated with the Chinese government, increased its stake in the country's largest bank supported risk appetite.

According to data released in Japan, the PPI decreased by 0.3 percent on a monthly basis in September, while it rose by 2 percent on an annual basis, remaining well below expectations. Core machinery orders in the country also fell by 0.5 percent monthly, failing to meet forecasts.

Analysts reported that these data support the Bank of Japan (BoJ) in continuing its loose monetary policy implementation.

Near the close, the Nikkei 225 index in Japan rose by 1.6 percent, the Shanghai composite index in China by 0.8 percent, the Hang Seng index in Hong Kong by 2.1 percent, and the Kospi index in South Korea by 0.8 percent.

Domestically, the BIST 100 index on Borsa Istanbul, which followed a selling-weighted trend yesterday, completed the day with a 1.33 percent loss at 8,330.64 points.

The Dollar/TL, after completing the day at 27.7029 with a 0.1 percent decrease yesterday, is trading at the 27.7480 level at the opening of the interbank market today.

Analysts stated that weekly money and banking statistics domestically, and CPI, weekly jobless claims, and treasury cash balance data in the US, as well as the news flow regarding the clashes between Israel and Hamas abroad, will be followed today, and that technically, the 8,400 and 8,550 levels are resistance, and 8,250 and 8,080 points are support positions for the BIST 100 index.