Having left behind Moody’s related tension, markets were in an effort to recover this week, despite reemerged terrorist activities and expected downgrade from Fitch as well. With an increase in risk appetite, 5Y Turkish CDS spread which ended Sep 30 week at 262.1 has come down below 250 by Oct 7 close. BIST100 ended the week at 77,976 on a 1.9% gain (0.3% in $ terms) while USD/TRY was 1.7% up to 3.053 at the end of the week. Thanks to sharp drop in September inflation and globally low yields, bond yields have ended the week lower than previous week. 2Y benchmark bond yield closed at 8.66% in Sep 7, down from 8.71% a week ago while 5Y and 10Y benchmark bond yields were %9.20 and 9.72% respectively at the end of the week, up from 9.31% and 9.78% on Sep 30 close.
August industrial production and balance of payments will be the main releases of the week inside while US retail sales as well as inflation, trade balance and industrial production in China will closely be followed throughout the week.
Turkey – 10:00 Industrial Production (Aug): Industrial production which is the main market mover in Turkey this week will be announced on Monday at 10:00 Turkish time. Data will be important as it will provide hints over growth performance in the third quarter of the year. Market expects August industrial production to post 3.4% y/y growth in calendar adjusted basis. In July, industrial production showed a marked decline by 4.9% over a year ago and should data points to a recovery, market will consider the drop in July as an aberration. A better than expected realization would lead to an ease in exchange rate and pick up in share prices in BIST.
Eurozone– 12:00 ZEW Expectation Survey (Oct): There is no consensus over ZEW index which is an important indicator for assessing the expectation of financial sector and European recovery. Market will follow whether index level will exceed its previous realization of 5.4. A better standing will support EUR/USD parity.
US – 21:00 Monthly Budget Statement (Sep): As a country with twin deficit, US budget statements are crucial for the fate of both indebtedness of the country and bond yields. Market expects US budget to generate $29.3 bln budget surplus in September. Such realization will support bond yields as it will lower borrowing need.
Eurozone – 12:00 Industrial Production (Aug): Industrial production in Europe as one of the main growth indicators will be announced on Wednesday at 12:00 GMT+3. Market consensus is a 0.8% rise over previous year in working day adjusted basis. Industrial production was down 0.5% in July. A better than expected realization would support EUR/USD parity.
Turkey – 10:00 Balance of Payments (Aug): The other important release of the week in Turkey will be August balance of payments to be announced by the CBRT at 10:00 (GMT+3). Market consensus for current account deficit is $1.5 bln. This would carry 12M trailing deficit from $28.9 bln in July to $30.7 bln in August. Data has no material market impact however surprisingly low or high realization may lead to a volatility in exchange rate.
US – 17:00 JOLTS Job Openings (Aug): JOLTS (Job Openings and Labor Turnover Survey) which came into consideration because Fed Governor Janet Yellen closely follows will be announced on Wednesday at 17:00 (GMT+3). Market consensus for August realization is 5788 whereas it was 5871 in July. A better than expected realization may alleviate the impact of weak nonfarm payroll data in the market.
China – Foreign Trade (Sep): Trade balance in China is important for global markets as it will provide hint over Chinese growth. Exports are expected to post a y/y drop of 3.3% in September while imports are expected to be 0.7% lower than the previous year. Those rates were -2.8% and 1.5% respectively in August signaling a weakening in September. Realization in line with market consensus will confirm the weakness and may have negative market impact by raising growth concerns.
US – 15:30 Jobless Claims (Oct 8): Initial jobless claims which dropped to 249K in the week to Oct 1, lowest level since April is expected to be 254K in the week to Oct 8. Data remaining below 250K will convince investors that initial claims have dropped to a lower level permanently. This may push both dollar index and US 10Y bond yields higher. Recall that initial jobless claims stay below 300K for 83 weeks and constitutes the longest trend since 1970.
China – 4:30 Inflation (Sep): China consumer inflation which will be announced at 4:30 (GMT+3) is expected to rise to 1.6% in September from 1.3% a month ago. A realization in line with or higher than expected may create positive market impact as it will hint economic recovery in China.
Eurozone – 12:00 Trade Balance (Aug): Eurozone trade balance which will be announced at 12:00 (GMT+3) may weigh on EUR/USD parity. Seasonally adjusted trade balance is expected to generate €20.4 bln surplus in August whereas it was €20.0 bln in July. A higher than expected trade surplus would push EUR/USD higher.
Turkey – Private Sector Long Term External Debt (Aug): Treasury will announce Turkey private sector long term external debt. Market follows data more closely than a couple of years ago as low yields globally have led to sharp increase in private sector debt. There is no consensus but debt level at the end of 2015 was $195.4 bln and rose to $206.6 bln n July.
US – 15:30 Retail Sales (Sep): Retail sales as one of the leading US growth indicators followed very closely by markets will be announced on Friday at 15:30 (GMT+3). Core retail sales which exclude automobile and gas from total is expected to post 0.3% rise over previous month in September. The ratio was -0.1% in August. A better than expected realization would lead to a pickup in dollar index and US bond yields.
US – 17:00 Michigan University Sentiment Index (Oct): Though it is considered as a second tier data in terms of market impact, data is important to show the tendencies of economic actors. Index level according to preliminary results is expected to rise to 92.0 in October from 91.2 a month ago.
09 Oct 16 (Sun)
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