Turkey’s official consumer price index (CPI) inflation recorded 61% y/y in March following on from 54% y/y in February, the
At 61%,
The hunger and poverty rampant across
Unbelievable? Believe it. But even those who stick with the official 61% y/y cannot escape the ugly reality that the inflation rate now sits at least 47pp above the central bank’s policy rate of 14%. The rate determined by ENAG is 129pp above the benchmark.
In February,
The
Following the March release for official CPI inflation, there was a sense that the market has thrown in the towel when it comes to anticipating where Turkey’s inflation reading might peak. Previously, the market assessed that a figure in the 60%s in May might provide the summit. Currently, god only knows.
Brent oil and commodity prices, in general, are still on a wild path. So far, the price fluctuations have been ascribed to speculative trading on the financial markets.
Despite the fluctuations, average commodity prices have boomed. The FAO food price index was record-breaking in February at 141, up 24% y/y.
As of
If the lira crashes again and commodity prices go totally off the rails,
On
On
On
Turkey’s monetary policy remains entirely inefficient. There is no foreign interest in Turkish papers.
Net lira creation via loans has gone beyond the pale again. As of
The Erdogan regime treats
Despite the eased monetary conditions, economic activity has not responded positively. And
The media's attention span for the war is contracting, just as the slaughter is intensifying. The Russians have surrounded cities and are laying them to waste. The mood is that everyone wants to end this unnecessary massacre, but there is no deal emerging on the horizon as yet.
On the contrary, there's lately been talk of chemical weapons. Talk of chemical weapons opens the way to provocations. In
Chemical weapons or not, risks and provocateurs will abound until the violence ends.
Whatever the result of the war,
His hobbies included confounding despised representatives of so-called democracies, intervening in US elections and supporting the extreme-right in
Back to the lira. The Erdogan regime has been aiming to keep the USD/TRY pair below the 15-level since
Turkey’s trade deficit remained high at
In April, a limited recovery will be observed as gas bills will decline and the tourism season will begin.
Turkey’s 5-year credit default swaps (CDS) are hovering in the 500s while the yield on the Turkish government’s 10-year eurobonds is in the 8%s.
On the global markets, the USD index (DXY) magically remains below the 100-level, while the yield on 10-year
The market is still speculating that a rate hike move may be seen from the
At the end of the day,
It is similar with the Fed. One day, a 25bp hike weighs. The next day, a 50bp hike weighs.
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Fed governor
There are six more rate-setting meetings left in the year. The governors thus expect to deliver rate hikes at every meeting.
May, August and November this year could bring blood red markets due to the Fed tightening.
On
Tightening is inevitable now. The market does not like it. The US yield curve has flattened.
Under normal conditions, if the curve becomes inverted (particularly when the 2-year yield is higher than the 10-year yield), it is a signal that the market expects a recession in the next year.
However, the Fed has been the dominant player in the US bond market since 2020. So, whether the market is functioning normally at the moment is discussed.
The
Recently,
In the old days, these businesses used to be conducted more implicitly. The masses were told about patriotism, the flag, the nation, democracy and so on.
Right now, the policymakers simply do not state that “this war has come as a godsend to blame for all our problems”.
Biden can try to cut down on the amount of dollars in circulation and he can check again whether Putin can once more increase fuel prices.
Annual CPI inflation in the US rose to 7.9% in February from 7.5% in January, 7% at end-2021 and 1.4% in
Inflation in the Euro Area extended its record to 7.5% y/y in March after breaking out to 5.1% in January and 5.8% in February. Producer price inflation reached 31% in January.
How inflation trends can be reversed without a recession in the real economy and a collapse in the financial markets is unknown.
In
One important change in the election law is that Erdogan will (indirectly) choose the heads of the provincial electoral boards. This could be a sign that Erdogan will aim for another fait accompli.
Under normal conditions, amendments to the election law come into effect at the end of the first year following parliament's approval. However, the electoral board change will come into effect after three months. So, Erdogan keeps the option of a snap poll in his hand.
Other changes voted through do not make much sense. For instance, the ruling coalition has attempted election engineering based on the results of previous elections. There is a method for allocating seats in parliament known as the D'Hondt method, which punishes smaller parties in favour of bigger parties.
Now the D’Hondt method will not be applied to the party blocs but directly to the parties. The regime hopes to benefit from it (it seems it has no hope of winning the presidential election but is trying to hold the line in parliament). However, the results will change at the next polls and the amendments will work in favour of the opposition. This always happens in
At the end of the day, Erdogan has three options. He can delay the elections (a war, perhaps even the ongoing conflict in
Erdogan will try any chance he gets. The risk of blood on the streets remains significant.
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