As we leave behind a critical week, last week’s economic calendar was quite busy. On the Turkish front, the Central Bank of the Republic of Turkey (CBRT) Monetary Policy Committee (MPC) decided to keep the one-week repo auction rate, which is the policy rate, unchanged at 50%. The Retail Sales figure was announced at 2.3%. This week, the focus will be on Turkey’s Gross Domestic Product (GDP) figures, which will be published on the last trading day of the week! Particularly, growth figures, which play a direct and significant role in interest rate policy, will be crucial in answering whether the CBRT might change its interest rate policy.
On the U.S. side, last week saw the release of the Services Purchasing Managers’ Index (PMI). Since the U.S. is a service-driven economy, PMI figures can provide important clues about the economic outlook. Expectations were at 55.2, but the data came in at 57.00! With the Services PMI surpassing expectations, the likelihood of a Federal Reserve (Fed) rate cut in December dropped to 52% in CME markets. As rate cut expectations weakened, the dollar continued to remain strong in the market, while outflows from precious metals were observed.
This week, critical data will be released in the U.S.! On Wednesday, the Core Personal Consumption Expenditures (PCE) Price Index and third-quarter GDP figures will be announced, both of which are key in determining whether the Fed will proceed with a 0.25 bp rate cut in December. These simultaneous releases could create high market volatility. For PCE inflation, expectations are in line with the previous month at 0.30%. If figures come in below expectations, markets may be convinced that inflation is falling, strengthening expectations for a Fed rate cut in December. On the GDP side, expectations are at 2.80%, while the previous month’s figure was 3.00%. If GDP comes in below expectations, it could support the possibility of a Fed rate cut, whereas figures above expectations could reduce the likelihood of such a move. Therefore, during the data release, we may observe indecisive and highly volatile market movements.
Meanwhile, the precious metals market began the week with activity influenced by geopolitical developments. According to Israeli media, reports that the Tel Aviv administration has accepted the general outlines of a ceasefire agreement with Hezbollah created high market volatility, causing precious metals to start the week on a bearish note. Spot gold opened the week at $2,710 but continued pricing around $2,675 with geopolitical news updates. Spot silver opened at $31.35 but maintained pricing around $30.80 under similar influences.
Additionally, due to import quotas, the increase in domestic demand continues to cause price discrepancies. At the start of the week, the difference between global markets and Turkey’s market in terms of spot pricing was around $125.
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