Global Markets Focus on Fed Chair Warsh's Messages Ahead of Jackson Hole
While investors in global markets are locked onto Fed Chair Kevin Warsh's upcoming speech at the Jackson Hole Economic Policy Symposium, US inflation data and statements from other Fed officials keep interest rate hike expectations alive.
A cautious trend is observed in global markets ahead of the monetary policy messages that Fed Chair Kevin Warsh will deliver at the Jackson Hole Economic Policy Symposium. Macroeconomic data released in the US pointing to inflationary pressures and hawkish statements from Fed officials are causing investors to maintain their expectations of an interest rate hike.
Fed Expectations and Bond Yields
In money market pricing, it is anticipated with a 66 percent probability that the Fed will keep the policy rate unchanged next month, while the probability of a 25 basis point rate hike in October is evaluated at 62 percent. Along with these expectations, the US 2-year bond yield rose to 4.23 percent, while the 10-year bond yield is hovering at 4.69 percent.
Statements from Fed officials also support the cautious stance in the markets. Kansas City Fed President Jeffrey Schmid drew attention to the stubborn course of inflation, while Cleveland Fed President Beth Hammack stated that it is time to take action on inflation. Boston Fed President Susan Collins expressed that she is open to supporting a rate hike if necessary.
Latest Situation in European and Asian Markets
While a selling trend prevailed in European stock markets yesterday, except for Germany, the European Central Bank (ECB) meeting minutes revealed that a new interest rate hike could be implemented if inflation does not fall. On the Asian side, expectations that the Bank of Japan could raise interest rates next month strengthened as inflation in Tokyo accelerated to an annual 1.9 percent in August.
Domestic Developments and CMB Decision
While the BIST 100 index in Borsa Istanbul completed the day with a 0.24 percent loss of value at 14,575.51 points, the USD/TRY exchange rate started the new day with a 0.2 percent increase at 48.2450. The Capital Markets Board (CMB) announced that priority will be given to public offering applications with a market value exceeding 15 billion liras and projecting at least a 50 percent allocation to foreign investors.