All eyes are on the intense data agenda in global markets

The strengthening effect of the tightening steps of central banks around the world on inflation is leading policy makers to act more cautiously.

Despite the slowdown in inflation, the workforce side remains strong, which has an impact on investors’ decision-making processes.

Risk appetite increased in the markets as the US Federal Reserve’s (Fed) interest rate decision and Fed Chairman Jerome Powell’s statements were in line with market expectations.

While the Fed kept the policy rate constant at 5.25-5.50 percent within expectations, the bank said in a statement that the latest indicators show that economic activity will increase in the third quarter. “strong” It was reported that it indicates rapid growth.

WILL FED CONTINUE INCREASING INTEREST RATES?

In the press conference held after the bank’s policy decision, Fed Chairman Jerome Powell underlined that they were determined to reduce inflation to the 2 percent target and explained that they would make decisions regarding the scope of additional monetary policy tightening and how long the policy will remain restrictive, based on incoming data and the evolving outlook and risks.

Stating that they are following the rise in long-term bond interest rates and that this situation has contributed to the tightening of financial conditions since the summer, Powell stated that permanent changes in financial conditions may have effects on the course of monetary policy.

Powell stated that tight financial conditions resulting from factors such as the strong dollar and low stock prices, as well as the rise in long-term bond interest rates, may be important for future interest rate decisions.

Fed Chairman Powell said that they are not yet sure that monetary policy is restrictive enough.

While the employment increase in the USA, which was below expectations, indicated that the tight labor market in the country was beginning to loosen, the risk appetite in global markets increased with the decline in bond interest rates and the decrease in funding costs, with the expectation that the Fed’s interest rate increases may have come to an end in asset prices.

While the statements of Fed officials were also followed, Richmond Fed President Thomas Barkin pointed out that the labor market was in a better balance and stated that he did not know whether the Fed had reached the peak in interest rates.

Minneapolis Fed President Neel Kashkari also noted that there is a lot of uncertainty about what drives bond yields, and that the slowdown in the labor market is also positive.

“WE EXPECT A SLOW AND STABLE PROGRESS IN INFLATION”

Atlanta Fed President Raphael Bostic stated that the Fed’s policy is probably in the right place, considering the economic outlook, and that he expects a slow and steady progress in inflation.

Stating that he may support keeping the interest rate constant for approximately 8-10 months, Bostic said that the Fed will evaluate interest rates as inflation approaches 2 percent.

Developments in the Israeli-Palestinian conflict continue to be followed closely around the world.

On the other hand, the US Treasury Department reduced its borrowing forecast for the fourth quarter of this year from $852 billion to $776 billion.

The US Treasury Department also announced that it will sell $112 billion worth of bonds with 3, 10 and 30-year maturities.

After the ministry’s borrowing announcement, US 10-year treasury bond yields entered a downward trend.

On the other hand, with the expectations that the US economy may have a soft landing and the prediction that the Fed’s interest rate increases have come to an end, a buying-oriented trend came to the fore in the bond markets, while the US 10-year bond interest fell by approximately 32 basis points and completed the week at 4.5190 percent.

Volatility in commodity prices continues to remain strong. The barrel price of Brent oil finished the week at $85, with a decrease of 4.2 percent. The ounce price of gold decreased by 0.6 percent and completed the week at $1,993.

A POSITIVE TRAVEL WAS OBSERVED IN THE NEW YORK STOCK EXCHANGE LAST WEEK

New York stock market finished the week positively after the Fed’s interest rate decision last week

Analysts stated that the data announced in the USA are interpreted as inflation pressures continuing to decrease, and this supports the predictions that the Fed’s interest rate increase cycle has come to an end.

The number of people applying for unemployment benefits for the first time in the USA was above market estimates last week, and the highest value in 7 weeks was recorded with 217 thousand.

Unit labor cost, one of the inflation indicators followed by the Fed and expected to increase by 0.7 percent, decreased by 0.8 percent in the third quarter compared to the previous quarter.

Private sector employment in the USA increased by 113 thousand people in October, below market expectations. Last month, annual wage growth was 5.7 percent, the lowest since October 2021.

While the average interest rate for a 30-year mortgage (housing loan) in the country decreased for the first time after a 7-week rise, mortgage applications continued to decline.

The number of JOLTS job vacancies in the USA increased to 9 million 553 thousand in September, exceeding market expectations.

While non-agricultural employment in the country increased by 150 thousand people in October, below expectations, the unemployment rate increased from 3.8 percent to 3.9 percent.

Analysts said that the slowdown in the labor market signals that economic activity in the United States is losing momentum, as the Fed intended. Non-agricultural employment increased by 336 thousand people in October.

Average hourly earnings, which the Fed watches closely, rose 0.2 percent to $34. Market expectations were that average hourly earnings would increase by 0.3 percent in the said period, as in September.

Following the employment data announced in the USA, the possibilities of an interest rate increase in the next three meetings in the money markets have decreased considerably, and it is predicted that the Fed may start reducing interest rates in June.

While Apple is being followed in the ongoing balance sheet season in the USA, the income of the technology giant in the July-September period decreased by approximately 1 percent on an annual basis, falling to 89.5 billion dollars.

Apple’s net profit increased by 10.8 percent in the July-September period, reaching 22.96 billion dollars.

With these developments, last week, the Nasdaq index in the New York Stock Exchange completed the week with an increase of 6.61 percent, the S&P 500 index with an increase of 5.88 percent and the Dow Jones index with an increase of 5.07 percent.

In the week starting November 6, the foreign trade balance will be followed on Tuesday, wholesale stocks on Wednesday, Fed Chairman Powell’s statements and weekly unemployment applications on Thursday, and the University of Michigan consumer confidence index on Friday.

A BUYING MAIN COURSE WAS STANDING OUT IN EUROPEAN STOCK EXCHANGES

While a buying-oriented trend was prominent in European stock markets last week, the macroeconomic data announced were effective in this rise.

The data announced in Germany was effective in this trend. Annual inflation in Germany fell to 3.8 percent in October, falling to its lowest level since August 2021, while the country’s economy performed better than expectations, despite shrinking by 0.8 percent on an annual basis in the third quarter.

While the data in question indicates that the steps taken within the scope of the fight against inflation in the region are bearing fruit, albeit slowly, the better economic activity than anticipated contributed to the alleviation of recession concerns, albeit limited.

Annual inflation in the Eurozone, which was 4.3 percent in September, fell to 2.9 percent in October, the lowest level in the last two years. The Eurozone economy shrank by 0.1 percent in the third quarter of this year compared to the previous quarter.

Analysts noted that the slowdown in inflation in the region was compatible with the policy steps of the European Central Bank (ECB), and stated that the limited contraction in the regional economy increased the possibility of a soft landing and fed the risk appetite.

Last week, the Bank of England (BoE) kept the policy rate constant at 5.25 percent. In his statement after the meeting, BoE Governor Andrew Bailey stated that they expect inflation in the country to fall below 5 percent in October and said, “However, inflation is still very high. Therefore, we will keep interest rates at high levels for long enough until we reduce inflation to our targeted level.” said.

German Central Bank (Bundesbank) President Joachim Nagel stated that he expects growth again next year after the current weakness in the German economy.

While company financial results announced in the region also increased stock and sector-based volatility in equity markets, the German airline company Lufthansa Group increased its profit by 31 percent annually in the third quarter, reaching 1.47 billion euros.

With these developments, last week the DAX index in Germany increased by 3.42 percent, the CAC 40 index in France increased by 3.71 percent, the MIB 30 index in Italy increased by 5 percent and the FTSE 100 index in the UK increased by 1.73 percent.

Next week, factory orders and service sector PMI in Germany on Monday, service sector PMI in the Eurozone, industrial production in Germany on Tuesday, PPI in the Eurozone, CPI in Germany on Wednesday, retail sales in the Eurozone, and growth in the UK on Friday will be followed. .

ASIAN MARKETS WERE POSITIVE

A positive trend was also observed in Asian markets last week.

The perception that the company was gaining time after the hearing regarding Evergrande’s debt restructuring in China was postponed to December was one of the factors that positively affected the Asian markets.

The strengthening of the expectation that central banks’ interest rate increases are nearing an end had a positive impact, especially on technology companies in Asia. The Japanese government also announced a stronger economic support package than expected.

While the Bank of Japan (BoJ) removed the yield curve target of plus-minus 0.5 percent from its policy text, it announced that it will now use the 1 percent level, which it had previously determined as the ceiling price, as the reference point.

While the bank kept the policy rate constant at minus 0.1 percent, analysts stated that with the decision, the BoJ stepped back from its commitment to buy unlimited bonds at 1 percent and question marks increased about where Japan’s 10-year bond interest rates would be determined.

With this step, Japan’s 10-year bond interest tested the peak of the last 10 years at 0.975 percent.

BoJ made unplanned bond purchases after the 10-year bond interest rate reached the highest level in the last 10 years. While the BoJ’s decisions being more dovish than expected increased the pressure on the yen, the dollar/yen parity, which increased by 1.7 percent to 151.73 on October 31, achieving the highest daily closing in the last 33 years, ended the week with a 0.1 percent decrease to 149.4. He completed from .

The parity completed the week with a decline after Masato Kanda, Japan’s most authoritative person on the exchange rate, stated that the parity was not moving due to fundamental economic reasons and that they would not refrain from intervening if necessary.

According to the data announced in China, the manufacturing industry Purchasing Managers Index (PMI) decreased to 49.5 and the service sector PMI decreased to 50.6.

With these developments, on a weekly basis, the Hang Seng index in Hong Kong increased by 1.53 percent, the Kospi index in South Korea increased by 3.16 percent, the Nikkei 225 index in Japan increased by 3.09 percent, and the Shanghai composite index in China increased by 0.43 percent. won.

Next week, foreign trade balance in China will be monitored on Tuesday and inflation in China will be monitored on Thursday.

DOMESTIC, EYES WILL BE ON INDUSTRIAL PRODUCTION

Domestically, last week, the BIST 100 index at Borsa Istanbul lost 0.01 percent of its value and finished at 7,705.99 points.

Dollar/TL completed the week at 28.3891, 0.76 percent above the previous close.

Central Bank of the Republic of Turkey (CBRT) Governor Hafize Gaye Erkan, in the Inflation Report presentation, said, “We will continue to strengthen monetary tightening until a significant improvement is achieved in inflation.” said.

Stating that the time to start disinflation will be after May, Erkan stated that with the steps taken, the total sterilization will soon exceed 1 trillion liras.

Erkan also stated that they updated the inflation forecast midpoints to 65 percent for 2023, 36 percent for 2024 and 14 percent for 2025.

On the other hand, the Consumer Price Index (CPI) increased by 3.43 percent and the Domestic Producer Price Index (D-PPI) increased by 1.94 percent on a monthly basis in October. Annual inflation was recorded as 61.36 percent in consumer prices and 39.39 percent in domestic producer prices.

While Turkey’s 5-year credit risk premium (CDS) decreased to 367.52 basis points, reaching the lowest level in 2 years, international credit rating agency Fitch Ratings revised its medium-term potential growth forecast for the Turkish economy from 3.9 percent to 4.1 percent. raised it to .

Analysts noted that technically, 7,750 and 7,850 levels in the BIST 100 index are resistance and 7,600 points are support.

Next week, CPI-based real effective exchange rate will be followed on Monday, treasury cash balance on Tuesday, industrial production and unemployment rate on Friday.