The markets started the new week and new month with sharp sell-offs! Last week, the economic calendar was quite busy. On the Turkey front, the critical Gross Domestic Product (GDP) (Annual) (Q3) figures were released. Expectations were at 2.6%, but the actual result came in significantly lower at 2.1%, confirming a technical recession. With the decline in growth figures, the possibility of an interest rate cut has gained further support! This week, all eyes will be on the inflation data to be released by TÜİK (Turkish Statistical Institute) on Tuesday. There is a prevailing expectation of a slight decrease in inflation. Expectations are around 46.60%, compared to last month's Consumer Price Index (CPI) of 48.58%. A drop in inflation, along with growth issues, could support the case for an interest rate cut. An interest rate cut could also lead to upward movements in the exchange rate.
On the U.S. front, last week, the Gross Domestic Product (GDP) (Quarterly) (Q3) and the Core Personal Consumption Expenditures (PCE) Price Index (Annual) (October) figures were released! GDP came in as expected at 2.8%, while the U.S. economy had grown by 3.00% in Q2. Meanwhile, the Core PCE Price Index was also in line with expectations, coming in at 2.8%, compared to 2.7% last month. Following the data, the probability of a 0.25 basis point rate cut by the Federal Reserve in December is priced at around 65% according to CME Watch.
This week, critical data will be released on the U.S. front! Today, the Manufacturing Purchasing Managers' Index (PMI) (November) and the ISM Manufacturing Purchasing Managers' Index (PMI) (November) figures will directly impact the U.S. economy's growth prospects in the coming period. Tomorrow, the Job Openings and Labor Turnover Survey (JOLTS) (October) data will provide key insights into the direction of the labor market! On Wednesday, the ADP Nonfarm Employment (November) data, considered a leading indicator for the Nonfarm Payrolls report, along with a speech from Fed Chairman Powell, could create high volatility!
On the last trading day of the week, the U.S. critical employment reports, including Nonfarm Payrolls, the Unemployment Rate, and Average Hourly Earnings, could have a significant impact on December! In particular, the Nonfarm Payrolls and Unemployment Rate figures, which are key in determining whether the Fed will cut rates by 0.25 basis points in December, will be released on Friday. For the Fed to support a rate cut, there needs to be deterioration in the U.S. labor market. If the labor market shows signs of contraction, the likelihood of a rate cut from the Fed will increase, whereas stronger-than-expected data could reduce the chances of a rate cut.
On the other hand, we started the week with increased volatility in the precious metals market due to geopolitical developments. As the conflict between Ukraine and Russia intensifies, potential peace negotiations aimed at ending the war are coming to the forefront. Tensions between the two countries are escalating along with the ongoing battlefield confrontations. However, discussions around the possibility of peace continue to fuel uncertainty about future developments. On the U.S. front, President-elect Donald Trump, on Saturday, posted on the social media platform Truth Social, demanding that BRICS countries use the U.S. Dollar (USD) as their reserve currency, threatening to impose a 100% tariff if they support another currency instead. This led to a bearish start for precious metals this week.
Especially due to the import quota, the increase in domestic demand continues to lead to price discrepancies. At the beginning of the week, the difference between the global markets and the Turkish market in terms of the ounce price started at around $90.
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