Turkey on Monday and all emerging markets (GOP Countries = GOI) is going to be a difficult day … Tuesday … do not sleep comfortable in it until the end of June for Republican traders. Why? A phrase for the Republican Party: Good news for America has now turned to bad news for emerging markets. There is an additional reason for Turkey: the inflationary tsunami begins on Monday.
While US non-farm payrolls beat expectations by one standard deviation in March, as announced on Friday, experts say about 1 million job gains in the next 2-3 months are normal. Services PMI data will come from around the world and the US this week. This data is also expected to indicate a strengthening in the US and the world. However, the IMF also issued its second warning: the US and China began to outpace the EU and the developing world in the growth race.
There are forecasts predicting that GDP growth in the US will increase by as much as 8% this year. China is not far behind 6%. When giants like the United States and China grow at this rate, inflation is inevitable. Inflation will decline, especially in an environment where raw material supplies are inelastic and supply chains are becoming fragile due to logistical difficulties and tension between the United States, China and Russia. As inflation slows, US bond yields will increase. There is no longer the Central Bank Babayiğit to cut interest rates among developing countries.
According to articles by Bloomberg and CNBC.com, the confusion will continue until the end of June in the GOU and the S & P500. We will be able to measure how persistent the wave of inflation will be in the United States when summer arrives. At that time, US bond prices will be more accurate. Either we will go to the bear market or we will keep walking towards the bright horizons.
Last week’s data about $ 2 billion of hot money from the system managed to lose to Turkey, on Monday they will gather inflation data for March. According to various surveys, the median CPI will slightly exceed 1%, bringing annual inflation to over 16%. However, based on the impressions we have collected from various bullish news, an annual CPI of around 16.5% above expectations would not be surprising, and a further explosion in the D-PPI may also cause anxiety in the markets.
According to the calculations of economists we trust, by the end of April-May, the annual CPI may reach a peak of around 19%, and the promise of the new head of the CBRT, Professor Kavcıoğlu, to follow a tight monetary policy.
If the Asian and European currency and bond markets last Friday’s US non-farm payroll data on sales response, this wave rebounds to Turkey. If the outward turbulence increases and merges with the CPI, it is inevitable that the last hot money left in the system will escape and that individuals will again turn to currency purchases.
I do not set a target in USD / TL because as you know, I will be a target in the press and in Ekşisözlük. However, I can serve as a registered traitor to remind you that foreign investment banks value TL between 8.50 and 9.00.
Your FSP, your everything
Atilla Yeşilada: If inflation increases, what will the exchange rate and interest be?
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