Yesterday, the Consumer Price Index (CPI) in the USA increased by 8.5 percent year-on-year in July and remained unchanged on a monthly basis.
While the CPI remained below market expectations, reducing the pressure on asset prices, the Dow Jones and S&P 500 index in the New York stock market reached the highest level of the last three months.
Although the pricing in the money markets after the data started to be priced in the September meeting with a 71 percent probability that the Fed will increase interest rates by 50 basis points, the statements of the Fed members caused the probability of a 50 basis point increase to decrease to 58 percent. The probability of an interest rate hike of 75 basis points, which was up to 70% before the data, is at the level of 42% today.
Chicago Fed President Charles Evans noted that the latest inflation data is the first positive reading on price pressures since the Fed began its tightening policy.
Emphasizing that inflation is still “unacceptably high”, Evans said that the Fed’s policy rate, which is currently in the range of 2.25-2.5%, will increase to 3.25-3.5 percent this year and to 3.75 percent by the end of next year. He said he expects it to increase to 4 range. Evans stated that he expects inflation to approach 2.5 percent next year, and that he does not expect the economy to slow down significantly in the near future.
Minneapolis Fed President Neel Kashkari also stated that interest rates should be increased further even if it causes a recession.
Expressing that the Fed is “far away from declaring victory” on inflation, Kashkari noted that such a rapid increase in interest rates may drag the economy into recession, and that a recession may occur in the near future. Kashkari argued that market expectations for rate cuts to begin early next year are unrealistic.
On the other hand, while the difference between the US 10-year bond yield and the yield on 3-month Treasury bills hovered around 20 basis points, the expectations that the country’s economy would enter recession remained strong.
With these developments, the S&P 500 index rose 2.13 percent, the Nasdaq index rose 2.89 percent and the Dow Jones index rose 1.63% in the New York stock market yesterday. Index futures contracts in the USA started the new day with a rise.
On the European side, the stock markets followed a buying-heavy course in line with the New York stock market yesterday. The euro/dollar pair stabilized at 1.0280, giving back a significant portion of its gains after testing 1.0369 yesterday, its highest level since July 5th.
According to the inflation data released yesterday in Germany, the CPI increased by 0.9 percent monthly and 7.5 percent annually in July, in line with expectations.
Yesterday, the FTSE 100 index gained 0.25 percent in the UK, the DAX 40 index gained 1.23% in Germany, the CAC 40 index gained 0.52 percent in France and the FTSE MIB 30 index gained 0.95 percent in Italy. Index futures contracts in Europe started the new day with a rise.
Asian stock markets, despite the hawkish statements of the People’s Bank of China (PBoC) yesterday, followed a buying-heavy course parallel to the US stock markets, while technology stocks lead the trend.
Yesterday, after the CPI increase announced in China pointed to the highest level of the last two years, the announcement from the PBoC stated that inflation is very close to the bank’s 3 percent target, and major monetary expansions now seem unlikely.
With these developments, Shanghai composite index gained 1.3 percent in China, Kospi index gained 1.4 percent in South Korea and Hang Seng index gained 1.8 percent in Hong Kong. In Japan, markets are closed for a holiday.
BIST 100 index, which improved its domestic record of the highest level it saw yesterday to 2,829.62 points, broke the closing record by completing the day at 2,829.58 points, 1.59 percent above its previous closing.
Dollar/TL, on the other hand, is trading at 17,9150 at the opening of the interbank market today, after closing at 17.8735 with a decrease of 0.15 percent yesterday.
Analysts stated that the balance of payments, weekly money and bank statistics in the country, unemployment applications in the USA and the Producer Price Index (PPI) data abroad will be followed today, technically, the BIST 100 index 2.850 and 2.880 levels are resistance and 2.800 points are support. told.
Economists participating in the survey conducted by AA Finans expect the current account to have a deficit of 3 billion 500 million dollars in June. While the current account account gave a deficit of 6 billion 468 million dollars in May, the 12-month current account deficit was 29 billion 444 million dollars.
The data to be followed in the markets today are as follows:
10.00 Turkey, June balance of payments
14.30 Turkey, weekly money and bank statistics
15.30 US, weekly jobless claims
15.30 US, July PPI
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