In his speech at the Jackson Hole Economic Policy Symposium on Friday last week, Powell renewed his commitment to fight inflation and signaled that a return to loose monetary policy would not be imminent.
Emphasizing that it will take some time to restore price stability, Powell said: "While higher interest rates, slower growth and softer labor market conditions will reduce inflation, it will also bring some pain to households and businesses." statements brought hard sales to the markets.
After Powell's statements, the probability of the bank's 75 basis points increase in interest rates in September in money market pricing increased to 75 percent, while the importance of the data to be announced this week increased as it was stated that the decision would depend on the sum of the incoming data and the improving outlook.
After the developments, there was a hard sell in the stock markets with the decreasing risk appetite globally, while the dollar index reached its highest level since September 2002 with 109.5. The 10-year bond yield of the US, which saw below 3.02 percent on Friday, exceeded 3.12 percent.
The New York stock market fell sharply after the personal income and expenditures data announced on Friday in the USA fell short of expectations. The Dow Jones index fell 3.03 percent, the S&P 500 index fell 3.37 percent and the Nasdaq index lost 3.94 percent, closing at a one-month low. The weekly losses of the indices were realized as 5.6 percent.
Despite the increasing recession concerns on the European side, with the statements made within the scope of Jackson Hole, the possibility of a 75 basis point increase in interest rates by the European Central Bank (ECB) at the September meeting was discussed. ECB Board Member Klaas Knot stated that European central bankers are considering raising interest rates faster to combat high inflation and said that he supports the 75 basis point increase in September. ECB member Robert Holzmann also stated that a 75 basis point rate hike in September should be part of the discussion. Bank of France Governor Francois Villeroy de Galhau stressed that the ECB needs another significant rate hike in September.
While the expectations that the ECB will raise interest rates by 75 basis points in September exceeded 50 percent, with the news flow in question, Germany's 10-year bond yield stood at 1.44 percent for 2 months and Italy's 10-year bond yield at 3.75 percent. It saw its highest level in 2.5 months. While the DAX 40 index depreciated by 2.26 percent in Germany, the CAC 40 index in France by 1.68 percent and the FTSE 100 index in the UK by 0.70 percent on Friday, the decline in the indices reached an average of 4 percent last week. Although the euro/dollar parity saw above 1 on Friday, it could not be permanent at these levels after Powell's statements and regressed to 0.9920 levels. In the first day of the week, when the markets in the UK will be closed due to a public holiday, futures indices follow a negative course.
In Asia, although the USA and China signed a preliminary agreement on how to control the companies listed on the New York Stock Exchange, it is seen that the new week started negatively on the equity markets side with the decreasing risk appetite globally. On the other hand, with the increase in the demand for the dollar, it is noteworthy that the depreciation of the Japanese yen and Chinese yuan accelerated. Close to the closing, Nikkei 225 index in Japan decreased by 2.5 percent, Shanghai composite index in China decreased by 0.3 percent, and Kospi index in South Korea decreased by 2.1 percent. The dollar/yen parity also reached its highest level in 1.5 months with 139.
Domestically, the BIST 100 index in Borsa Istanbul diverged positively from the global stock markets last week, increasing by 0.30 percent on Friday, breaking the closing record with 3,104.90 points. While the index carried its highest level to 3,188.07 points, it gained 4.17 percent on a weekly basis. Dollar/TL, on the other hand, started the new week at 18.1850 at the opening of the interbank market, after closing flat at 18.1643 on Friday.
Analysts said that the "hawk" messages given by central banks about fighting inflation, despite increasing recession concerns, reduced risk appetite globally.
Stating that the intense data agenda is expected to guide pricing in the new week, analysts said that, in addition to the manufacturing industry Purchasing Managers Index (PMI), which will be announced throughout the week, the employment report in the USA, inflation in the Euro Area, and growth data in the country will be closely monitored. reported.
Analysts stated that the domestic economic confidence index and foreign trade balance, and the Dallas Fed manufacturing index in the USA came to the fore in today's data agenda, and stated that technically, the BIST 100 index was at the level of 3.200 as resistance and 3.050 points as support.
The data to be followed in the markets today are as follows:
10.00 Turkey, August economic confidence index
10.00 Turkey, July foreign trade balance
17.30 US, August Dallas Fed manufacturing index