While markets continue to expect a rate cut from the Fed in the short term, precious metals started the new week on a bearish note due to the decreasing likelihood of Fed rate cuts in the medium to long term! The economic calendar was quite busy last week.
On the Turkish front, Retail Sales figures increased by 2.5% in September but only rose by around 0.2% in October. The decline in Retail Sales compared to the previous month signals a higher probability of economic contraction.
On the U.S. side, critical CPI, Initial Jobless Claims, and PPI figures were released last week. The Consumer Price Index (CPI) came in at an annual headline inflation rate of 2.7%, in line with expectations! Core CPI, on a monthly basis, was also in line with expectations at 0.3%. In summary, while inflation in the U.S. was reported in line with expectations, a slight increase in inflation compared to the previous month was observed. Meanwhile, Initial Jobless Claims, which directly impact the U.S. labor market, were reported at 242K versus expectations of 221K! Additionally, critical PPI figures in the U.S. came in at 0.4%, above the 0.2% expectation, further strengthening the dollar!
Following the data, the likelihood of a 25-basis-point rate cut by the Fed in December rose to 96% according to CME Watch, while expectations for rate cuts in 2025 continue to decline! On the other hand, last week also saw 25-basis-point rate cuts from Switzerland and Europe.
This week could mark the last volatile week of the year! It will be a very busy week in terms of data releases. Today, both Manufacturing and Services Purchasing Managers' Index (PMI) figures will be released from the U.S.! PMI is particularly considered an indicator of economic activity. On Tuesday, we will observe the performance of the U.S. retail sector through the Retail Sales data. On Wednesday, the most critical trading day of the week, inflation figures will be released from both the U.K. and Europe, after which all eyes will turn to the Fed's interest rate decision! We expect a 25-basis-point rate cut from the Fed. However, more importantly, attention will be on Chairman Powell's forward-looking projections during his speech following the rate decision!
On Thursday, Japan’s interest rate decision, which directly impacts the dollar's strength in the money markets, will be announced! Shortly after Japan, the U.K.'s interest rate decision will be released. On the U.S. side, the key data of the day will be the Q3 GDP figures and Initial Jobless Claims. On the final trading day of the week, the Core Personal Consumption Expenditures (PCE) Price Index will be announced from the U.S.! We particularly recall times when Fed Chair Powell emphasized PCE data as more significant than inflation figures.
Meanwhile, geopolitical developments that impact the precious metals market have caused a dynamic start to the week. Israel approved a plan yesterday to double its population in the occupied Golan Heights, citing political instability in Syria as the justification!
Additionally, due to import quotas, rising domestic demand continues to lead to price disparities. At the start of the week, the difference between global markets and the Turkish market in ounce terms began at around $35.
