Having left behind FOMC and MPC decisions, trading volume is expected to dip this week due to Christmas. Terror attacks in Turkey seems to have deter risk perception yet market reaction has remained limited. CDS spread which reflects the changes in country risk premium has narrowed from 281.3 in Dec 16 to 270.7 in Dec 23. BIST100 ended the week on 0.8% loss at 79,972 while loss in USD terms has been 1.1%. USDTRY appreciated 0.4% to 3.511 while 5y and 10y benchmark bond yields were on the fall in line with CDS spreads from 11.42% and 11.39% in Dec 16 to %11.09 and %11.13 in Dec 23.
Tourism, trade statistics and external debt stock will be closely followed while international data flow is quite weak. Yet, industrial production and inflation in Japan as well as pending sales in US will closely be followed.
You can find the details of main releases and events below.
Turkey – 14:30 Capacity Utilization and Real Sector Confidence (Dec): September capacity utilization rate (CUR) and real sector confidence (RSC) will be announced by the CBRT on Monday at 14:30 local time. There is no consensus about the data but we will follow whether the realization will exceed previous reading. CUR in December 2015 was 75.4% and seasonally adjusted CUR in November 2016 was 74.9. RSC in the meantime will give more hint about the real sector’s sentiment following quite weak business activity in the final quarter of the year. RSC in November 2016 has been 107.6 in seasonally adjusted terms while it was 102.2 in last year December.
Japan – 2:30 Inflation (Nov): CPI inflation in Japan is expected to rise to 0.5% in November from 0.1% y-o-y a year ago. Core inflation in the meantime is expected to slightly decrease to 0.1% in November from 0.2% a month ago. Any sort of pickup in inflation will be considered positive for Japan economy and will lead to an appreciation in Yen against USD.
US – 18:00 Richmond Fed Manufacturing Index (Dec): As an important regional index, Richmond Fed manufacturing index is expected to recover to 5.0 in December from 4.0 in November. No material market impact should be expected from data.
Japan – 2:50 Industrial Production (Nov): Industrial production is expected to post a y/y drop of 1.4% in November according to preliminary data while there was a 4.7% y/y increase in October. Realization in line with consensus or weaker would lead to a selloff in Yen.
US – 18:00 Pending Home Sales (Nov): Pending home sales which shows the home sales that has not been contracted but not completed is expected to drop 0.5% in November, following 0.1% rise in October. No material market impact should be expected from the data however a realization worse than expectations will deter the recovery recently seen in US housing market.
US – 18:30 Dallas Fed Manufacturing Activity (Dec): Dallas Fed manufacturing activity index which will be announced on Wednesday at 18:30 (GMT+3) is an important regional data though it is second tier in terms of predictive power. Index level is expected to slightly decline to 10.2 in December from 10.1 a month ago. Indices regarding economic activity this week are not pointing to the same direction, hence no material market impact should be expected from data.
Turkey – 11:00 Foreign Tourist Arrivals (Nov): Tourism statistics which are quite important for current account will be announced on Thursday at 11:00 Turkey time. There is no market consensus about data but incoming tourists dropped by 25.8% in October and we will see whether slight recovery seen since September will extend in November.
US – 16:30 Initial Jobless Claims (Dec 24): Initial jobless claims which showed the lowest level since 1973 in Nov 12 with 235k is expected to stay at 265k in the week to Dec 24 whereas it was 275k 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 94 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.
Turkey – 10:00 Trade Balance (Nov): Turkstat will announce November trade balance on Friday at 10:00 a.m. Turkish time. Monthly trade deficit is expected to be $4.1 bln while a wider deficit would support depreciation in the currency. 12m rolling trade deficit in November will slightly pick up to $57.0 bln from $56.8 bln a month ago if data comes in line with expectations. Data is expected to have little market impact unless a big surprise occurs.
US – 17:45 Chicago PMI (Dec): Though it has no material market impact on its own, it will give a hint over economic activity in the region. Index level is expected to decline to 56.5 from 57.6 a month ago.
03 Jul 18 (Tue)
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