Sell-off trend in global markets and expectations of a busy data agenda
As global bond markets experienced selling pressure and rising energy costs made for a weak week, investors focused on critical macroeconomic data to be released next week.
A sell-off trend was observed in global markets as selling pressure in the bond market and rising energy costs triggered inflation concerns. Following US employment data and central bank moves, investors turned their attention to next week's heavy data calendar.
Global Bond and Foreign Exchange Markets
While rising inflation pressure and central bank tightening steps increased selling pressure in global bond markets, long-term bond yields remained at high levels. The US 10-year Treasury yield stabilized at 5.28 percent, and the 30-year yield at 5.61 percent. Amid the rise in bond yields and fiscal concerns stemming from France, the dollar index completed the week at 101.9, while the ounce price of gold dropped to 4,141 dollars.
US Economy and Employment Data
In the US, non-farm payrolls increased by 29,000 in September, remaining below expectations, while the unemployment rate rose to 4.2 percent. Following this data, the probability of the Fed going for a rate hike in October dropped to 23 percent. On the other hand, the core personal consumption expenditures price index, closely watched by the Fed, rose by 3 percent annually in August.
Energy Markets and Geopolitical Developments
While rising oil prices fueled inflation fears, a total of 100 million barrels of oil reserves were decided to be released in coordination with G7 countries and the International Energy Agency. The December futures price of Brent crude increased by 3.5 percent on a weekly basis to reach 102.3 dollars.
Trend in European and Asian Stock Exchanges
In European stock markets, the increase in energy costs and high inflation data coming from France, Italy, and Germany led to a negative trend. Annual inflation in the Eurozone saw a 3-year high at 3.8 percent. In Asia, rising bond yields suppressed risk appetite, and a generally negative outlook prevailed in Asian stock markets excluding Japan.
Domestic Markets and Capital Market Developments
On Borsa İstanbul, the BIST 100 index completed the week with a 4.88 percent drop at 12,270.18 points, while Dollar/TRY closed at 49.1285. The Capital Markets Board decided to make interim payments not exceeding 1 million liras to participants in certain funds undergoing liquidation. Treasury and Finance Minister Mehmet Şimşek stated that problematic portfolio management companies in the fund markets have been quarantined.
CBRT and Next Week's Data Calendar
The Central Bank of the Republic of Turkey raised the growth limit for SME loans to 5 percent in the required reserve implementation. Next week, global service sector PMI data, US retail sales and inflation figures, and central bank minutes will be monitored.