While the low risk appetite theme continues in global markets, with the strengthening dollar and increasing borrowing costs increasing recession concerns, the statements of the central bank officials are expected to be decisive in terms of investor pricing today.
Global dollar demand continued to strengthen after central banks aggressively increased interest rates last week and signaled that the high interest rate environment would continue for a while.
With the support of hawkish statements from Fed members, the dollar rose to record levels again.
THE DOLLAR INDEX IS AT THE TOP OF 20 YEARS
While the dollar index tested the new peak of 20 years with 114.7, the Euro/dollar parity fell to the lowest level since June 2002 with 0.9540 due to the decrease in the confidence in the economies of European countries. Sterling/dollar parity remained at its all-time low with 1.0640, while dollar/yen parity continued its 24-year high with 144.7 despite direct foreign exchange intervention. The historical weakening of the euro, sterling and yen was also joined by the Chinese yuan this morning and the dollar/yuan parity crossed the critical threshold of 7.20 to reach 7.2297, the highest level since January 2008.
With the strengthening of recession fears, turbulence continued in the bond market and the US 10-year bond yield tested 4 percent for the first time since April 2010. The 10-year bond yield reached its highest level since September 2008 with 4.53 percent in the UK, December 2011 with 2.26 percent in Germany, and June 2013 with 4.76 percent in Italy. he saw.
While the statements of Fed officials were followed closely yesterday, Chicago Fed President Charles Evans said that interest rates should be increased to the range of 4.50-4.75% by the end of the year.
st. Louis Fed President James Bullard emphasized that the USA has a serious inflation problem and that it should be answered, and noted that the credibility of the Fed’s 2 percent inflation targeting regime is at risk.
On the macroeconomic data side, while durable goods orders in the USA decreased by 0.2 percent monthly in August, new home sales increased by 28.8 percent in this period, despite the high housing loan rates.
With these developments, a mixed course was observed in the New York stock market yesterday, while the Dow Jones index decreased by 0.43 percent and the S&P 500 index decreased by 0.21 percent, while the Nasdaq index gained 0.25 percent. It is seen that the US index futures contracts started the new day with a decrease.
On the European side, after gas leaks were detected in the Russian Nord Stream 1 and Nord Stream 2 pipelines in the Baltic Sea yesterday, the price of natural gas contracts traded in the Netherlands for October maturity rose by more than 20 percent to test 212 Euros. Ursula von der Leyen, President of the European Union (EU) Commission, stated that they were evaluating the sabotage action against the pipelines, while Germany announced that it plans to extend the life of two nuclear power plants to alleviate the energy crisis. On the other hand, Russian energy company Gazprom also stated that Russia may impose sanctions on Ukraine’s national gas company Naftogaz due to its unfriendly approach.
“WE CAN’T BE REGISTERED”
While “hawk” messages continue to come from central banks, as well as the developments that caused concerns about the energy crisis to remain on the agenda, Bank of England (BoE) Chief Economist Huw Pill said yesterday that the tax cuts planned by the government should be paid in return for a remarkable monetary policy.
Noting that the Bank should wait until the next Monetary Policy Committee meeting, which is scheduled in the first week of November, instead of making an urgent decision to raise interest rates after the latest developments, Pill said, “We are certainly not indifferent to the repricing of financial assets that we are seeing. ” used the phrase.
With these developments, the selling trend in the European stock markets continued yesterday and the DAX 40 index in Germany lost 0.72 percent, the FTSE 100 index in the UK by 0.52 percent and the CAC 40 index in France by 0.27 percent. European index futures contracts started the new day with a decrease.
Across Asia, risk appetite remained low with the sharp depreciation of the yuan this morning despite the moves of the People’s Bank of China to support the economy. On the Japanese side, it is noteworthy that the dollar/yen parity has risen to the 145 limit, which was previously signaled to intervene.
With these developments, Shanghai composite index in China decreased by 1 percent, Nikeki 225 index in Japan decreased by 2 percent, Kospi index in South Korea decreased by 2.3 percent and Hang Seng index in Hong Kong decreased by 2.6 percent.
DOLLAR (USD) HISTORICAL PEAK
Analysts stated that the rapidly rising bond yields and the strengthening of the dollar, in an environment where the central banks signaled that aggressive interest rate steps will continue, deepened the fears of recession, and said that the theme of low risk appetite and high volatility in global markets may remain on the agenda for a while.
Stating that the course of the bond and foreign exchange markets will continue to be closely monitored, analysts stated that the statements of the central bank officials will be followed today, while wholesale stocks and pending housing sales in the USA are on the agenda.
Analysts stated that technically, the BIST 100 index is at the level of 3.200 and 3.140 as support and 3.370 points as resistance.
Daily Economy News 