WEEKLY OUTLOOK 19-23 December 2016

WEEKLY OUTLOOK

Volatility in global financial markets after FOMC meeting have spread over Turkish asset prices as well. However BIST100 closed to week 2.5% higher (1.2% in USD terms) than a week ago at 77,590. Lira lost 1.2% against USD, reaching 3.497 while long end of the yield curve have picked up. Accordingly, 2 year benchmark bond yield rose to 10.92% from 10.83% while 5y and 10y benchmark bond yields went up to 11.42% and 11.39% respectively from 11.19% and 11.23%. CDS spread as the main indicator of country risk premium has slightly narrowed to 281.0 from 286. 

 

CBRT Monetary Policy Council meeting where policy rate decision will be taken will be the main market mover inside. Japan BoJ rate decision, US and UK GDP growth rates will widely be followed in global financial markets. 

You can find the details of main data releases and events below. 

PAZARTESI

Eurozone – 12:00 Current Account Balance (Oct): Current account balance in Eurozone will be announced on Monday at 12:00 a.m. Turkish time. There is no consensus estimate for the monthly realization however current account balance in seasonally adjusted terms registered €23.5 bln surplus in September. A higher than previous month realization would lead to appreciation in EUR.

US – 16:45 Markit Service PMI (Dec):  Preliminary numbers for December service PMI in US suggests a pick up in the index from 54.6 in November to 55.2. Note that an index higher than critical threshold of 50.0 points to expansion in economy.

TUESDAY

Japan – 6:00 BoJ Meeting (Dec): Bank of Japan will announce its monetary policy decision after a two day meeting on Tuesday morning at 6:00 a.m. Turkish time. Main expectation is no additional easing from the Bank but a review of negative rate strategy. Should the Bank further eases monetary policy or hints so, Yen should be expected to get weaker. Note that Yen depreciated against dollar in the previous week, closing at 115.2 on Friday, with 1.2% loss.

Turkey – 14:00 Monetary Policy Council Meeting (Dec): Policy rate decision by Central Bank of Turkey will be announced on Tuesday at 14:00 local time. There is no market consensus however further rate hike may be in the cards in this week’s meeting. Recall that the CBRT halted simplification in October and hikes one week policy rate by 50 bps to 8.0% while O/N lending rate was hiked in 25 bps to 8.50%. Similar rate hike would ease pressure over lira.

WEDNESDAY

Eurozone – 12:00 Consumer Confidence (Dec): Economic activity indicators mostly pointing to a weakness in Eurozone after Brexit vote however consumer confidence index in December is expected to slightly edge up to -6.0 from -6.1 a month ago.

US – 18:00 Existing Home Sales (Nov): Existing home sales which measures the change in annualized number of existing residential buildings that were sold during the previous month is another key indicator of US housing market and hence economic activity. Market expects it to post 1.8% contraction m/m, showing a weakness compared to previous month’s 0.2% drop. A higher than expected realization would be considered positive for US and support DXY.

THURSDAY

US – 16:30 GDP Growth and Personal Consumption (3Q16): Third estimate for 2Q16 GDP growth which will be released on Thursday at 16:30 local time expected to be revised up to 3.3% from previously announced 3.2%. Personal consumption growth in the meantime is expected to remain flat at 2.8%. A stronger than expected outcome would increase dollar index and US bond yields. EM currencies would depreciate in such an outcome.

US – 16:30 Durable Goods Orders (Nov): Another widely followed indicator of economic activity, durable goods orders will be announced on Thursday at 16:30 Turkish time. Durable goods orders growth excluding transportation in November is expected to post 0.2% rise over previous month according to preliminary numbers. It posted 0.8% rise in the previous month. Data has market impact and may lead to a pick up in dollar index and bond yields should realization comes better than expectations.

US – 16:30 Initial Jobless Claims (Dec 17): Initial jobless claims which showed the lowest level since 1973 in Nov 12 with 235k is expected to stay at 259k in the week to Dec 17 whereas it was 254k in the previous week. A better than expected amount will convince investors that initial jobless claims have dropped to a lower level permanently. Recall that initial claims have been under 300,000 for 93 straight weeks, the longest streak since 1970. Hence, a realization lower than 250k would have a positive market impact on dollar and US bond yields.

US – 16:30 Chicago Fed National Activity Index (Nov): As an important regional indicator, Chicago Fed National Activity Index stood at -0.08 in October and market will follow whether realization will exceed October realization.  Data is expected to have no material market impact.

US – 18:00 Personal Income and Spending (Nov): Market follow personal income and personal spending to have a clue about demand conditions in US. Personal income in November is expected to accelerate from 0.3% to 0.6% while personal spending is expected to remain flat at 0.3%. Expectations do not point to a recovery in demand conditions but recovery in income and any realization better than expectations would support dollar index and US bond yields.

US – 18:00 Real Personal Spending (Nov): As an important indicator that shows inflationary pressures, real personal spending growth in November is expected to be stronger at 0.2%, compared to 0.1% in October. A higher than expected realization will support acceleration in DXY and bond yields.

US – 18:00 Core PCE (Nov): Core inflation which is widely followed by Fed is likely to follow the course of headline inflation in November. It is expected to remain flat at 0.1% in November, leading to a higher y/y inflation of 1.8% compared to 1.7% seen in October. A higher than expected inflation would be considered positive market in US and support DXY and US bond yields. A higher than expected realization will lead to further increase in dollar index.

US – 18:00 Kansas City Fed Manufacturing Activity Index (Dec):  Another regional indicator Kansas City Fed registered an index level of 1 in October and market will follow whether index will remain above it in September, as there is no market expectation. A recovery compared to previous month will be considered positive with limited market impact.

FRIDAY

UK - 13:30 GDP Growth (3Q16): Third estimate for the GDP growth in UK is estimated to be revised up to 2.3% from previously announced 2.1%. A realization in line with or better than expected will give support to GBP/USD which is hovering around 1.30.

US – 17:00 New Home Sales (Nov): US housing market data is crucial to get a hint about economic activity. New home sales, which show the annualized single family home sales are expected to rise by 2.1% in November over previous month following 1.9% drop in October. A better than expected realization will signal a recovery in consumer activity in US economy. This would lead to an acceleration in dollar index and US bond yields.

ABD – 18:00 Michigan Universitesi Eğilim Endeksi (Ara): Piyasa etkisi bakımından biraz daha ikincil bir veri olsa da ekonomik aktörlerin eğilimini yansıtması açısından veri önem taşıyor. Michigan Universitesi eğilim endeksinin Aralık ayında nihai göstergelere göre önceki açıklanan 98.0 ile aynı seviyede kalması bekleniyor.

ndencies of economic actors. Index level according to final results is expected to show no change from previously announced 98.0.

 

US – 18:00 University of Michigan Sentiment Index (Dec): Though it is considered as a second tier data in terms of market impact, data is important to show the te

03 Jul 18 (Tue)

02:11 pm


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