Global Markets Lock In US Inflation Figures

After strong sales in global markets due to inflationary concerns, investors focused on the US inflation figures for September and the Federal Open Market Committee (FOMC) meeting minutes, which will be released on Wednesday.

The continuation of the upward trend in commodity prices increased the concerns that inflation, which rose due to supply and demand-related factors after the pandemic, will remain on the agenda for longer than expected.

In an environment of downward pressures on GDP growth, increasing inflationary concerns cause uncertainties on monetary policies, and FOMC meeting minutes are expected to play an important role in shaping investor perception.

Recalling that at the September meeting, the Fed gave a signal for a slowdown in asset purchases soon if the economic development continues as expected, analysts said that markets expect the Fed will start these steps in December and be completed in the mid-2022.

Stating that the September inflation data to be announced on Wednesday will also give an important clue about the future of monetary policy, analysts emphasized that an inflation figure above the expectations will confirm the tightening roadmap.

The inflation rate was 5.3% in August and September expectation remains at the same level.

Short-term median inflation

On the macroeconomic side, according to the results of the New York Fed's Consumer Expectations Survey for September, short-term median inflation expectations covering the next 12 months increased by 0.1 percentage points to 5.3%, the highest level since 2013 when the survey was started.

On the other hand, the Job Openings and Labor Turnover Survey (JOLTS) data showed in the US that the number of job openings fell to 10.4 million in August, recording the first decline since December 2020.

A sales-weighted course followed these developments in the New York stock market yesterday, while the Dow Jones index depreciated by 0.34%, the S&P 500 index by 0.24%, and the Nasdaq index by 0.14%.

The US dollar index is at 94.3 on early Wednesday, after seeing its highest level on Tuesday – 94.6 – since September 28, 2020.

The 10-year bond interest rate of the US, which saw below 1.57% from 1.63% on Tuesday, was balanced at 1.58% on Wednesday.

Green bonds

On the European side, the union issued green bonds for the first time on Tuesday as part of the financing of the bailout program prepared to combat the economic consequences of the pandemic and there was a record-high demand for this issuance.

While the data released continued to undermine confidence in the economic recovery, a sales-heavy trend was observed in the European stock markets on Tuesday. It is also seen that the European index futures contracts started the new transaction day mixed.

-Asian markets

According to the data released in Asia on Wednesday, August machinery orders in Japan decreased by 2.4% on a monthly basis, contrary to the expectations of an increase.

In China, exports increased by 28.1% and imports by 17.6% in September compared to the same month of the previous year. The foreign trade surplus in the country exceeded the projections of $46.8 billion and reached $66.8 billion.

In addition to the mixed signals of macroeconomic data, regulatory steps for various sectors in China, debt restructuring in the real estate sector and developments regarding supply problems remain at the center of the agenda.

-Borsa IstanbulIn Turkey, the BIST 100 index in Borsa Istanbul, after starting the day with an upward trend, gave back its gains at close due to the rise in exchange rates and the declining global risk appetite and closed the day at 1,416.82 points with a limited increase of 0.04%.

US dollar/Turkish lira is trading at 9.0410 levels at the opening of the interbank market on Wednesday, after moving its historical peak to 9,0471 on Tuesday.

Meanwhile, the IMF raised its growth forecast for the Turkish economy from 5.8% to 9% for 2021 while keeping at 3.3% for 2022.

Analysts said that commodity prices, which have risen to record levels, continue to create inflation pressure on a global basis and that increasing uncertainties negatively affect the stock markets.

On Wednesday, economists will follow house sales statistics in Turkey, FOMC meeting minutes and inflation figures in the US, industrial production data in the EU, and inflation data in Germany.

*Writing by Gokhan Ergocun -