Recession fears grow in the US economy: Fed decisions awaited

In the US economy, as recession concerns take center stage following rising inflation risks, data on economic activity and the labor market may provide clues about the Federal Reserve's (Fed) potential interest rate cuts in November and December. Analysts note that despite data pointing to a contraction in the manufacturing sector and ongoing conflicts in the Middle East increasing risk perception, expectations of a "soft landing" are supporting risk appetite as the Fed enters a loosening cycle.

According to data released yesterday, the Conference Board Consumer Confidence Index fell to 98.7 in September, missing market expectations and marking the largest decline recorded since August 2021. Additionally, the Richmond Fed manufacturing index for September came in at minus 21, below estimates.

The S&P CoreLogic Case-Shiller National Home Price Index showed a 5 percent annual increase in July; however, signs of a slowdown in the pace of growth have emerged.

As statements from Fed officials continue, Board Member Michelle Bowman emphasized that inflation remains above the Bank's 2 percent target, stating that caution should be exercised regarding interest rate cuts. Pricing in money markets continues to strongly reflect expectations that the Fed will implement 75 basis points of cuts by the end of the year.

On the corporate side, shares of chipmaker Nvidia gained 3.9 percent after CEO Jensen Huang completed his stock sales, while Visa shares fell 5.5 percent after the Department of Justice filed a lawsuit against the company.

Meanwhile, the 79th session of the United Nations (UN) General Assembly began in New York with the participation of 76 heads of state and many high-level representatives. This year's session aims to address global issues and strengthen cooperation.

The US 10-year bond yield is trading at 3.74 percent, while the dollar index is hovering at 100.3. Gold prices reached a historic high of 2,670.38 dollars. The price of a barrel of Brent crude oil fell from 74.5 dollars to 74.3 dollars at yesterday's close.

Yesterday, the Dow Jones index gained 0.20 percent, the S&P 500 index 0.25 percent, and the Nasdaq index 0.56 percent. The S&P 500 index saw an all-time high of 5,735.32 points. However, index futures started the new day with a negative trend.

While a buying-weighted trend was observed in European stock markets, uncertainty continues regarding the steps the European Central Bank (ECB) will take by the end of the year. Business confidence in Germany fell to 85.4 points in September, marking its fourth consecutive monthly decline.

In Asian markets, economic stimulus from the People's Bank of China (PBoC) had an impact. The PBoC announced that it had lowered the interest rate on 1-year medium-term loans from 2.30 percent to 2.00 percent. Bank of Japan (BoJ) Governor Kazuo Ueda stated that they would not rush into interest rate hikes.

On Borsa Istanbul, the BIST 100 index closed the day up 1.44 percent at 10,029.73 points. The dollar/TL is trading at 34.1360, up 0.1 percent at the opening of the interbank market.

Today, sectoral inflation expectations will be monitored domestically, while weekly mortgage applications and new home sales will be followed in the US. The data to be watched in the markets today are as follows:

• 10.00 Turkey, September sectoral inflation expectations
• 14.00 US, weekly mortgage applications
• 17.00 US, August new home sales.