TRY: Commerzbank Revise USD/TRY Forecasts Higher, Say CBRT Measures Backfiring
May-02 14:25
- Commerzbank revise their USD/TRY and EUR/TRY forecast paths higher again in light of accelerated depreciation despite sharp, surprise rate hikes. They think that the central bank’s attempt to manage the exchange rate using layered interest rate tools and FX intervention is backfiring by damaging, not bolstering credibility. They see USD/TRY at 44.00 at end-December and EUR/TRY at 49.28.
- Another negative is that inflation expectations are turning higher again as the lira is weakening, Commerzbank say. The central bank’s end-2025 inflation forecast of 24% is now outdated, while the sizeable rate hikes only had a brief supportive effect on the lira. Thereafter, the rally reversed entirely, and depreciation pressure appears to be accelerating.
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US DATA: Strength In Factory Orders Reinforces Solid Pre-Tariff Narrative
Apr-02 14:20
New orders for manufactured goods ("factory orders") were a little stronger than expected in February, with the headline reading of 0.6% M/M (0.5% expected, 1.8% prior upwardly revised from 1.7%). The 3M/3M annualized rate of orders growth picked up to 1.6%, implying improved momentum after 2 consecutive negative monthly readings.
- Durable goods were minimally revised in the final reading: headline orders were upped 0.1pp to 1.0% M/M, but orders ex-transport (0.7%), and core capital goods orders (-0.2%) and shipments (0.8%) were all unrevised.
- As we noted following the durable goods report - in which orders greatly exceeded expectations - manufacturing data for February was suggestive of strong "hard" data for manufacturing in Q1. The factory orders data further supports this narrative.
- Incoming data since then - including a very weak ISM Manufacturing report for March - further supports the other part of the narrative however, which is that recent manufacturing strength reflects front-running the impact of tariffs, implying a dropoff in demand later in the year that may already be reflected by slowing core capital goods orders in February.
STIR: BLOCK: Jun'25 SOFR Call Spread
Apr-02 14:18
- 6,000 SFRM5 96.12/96.50 call spds, 3.5 ref 95.915 at 1011:37ET, adds to earlier Block at 3.75
STIR: STIR Option Update
Apr-02 14:11
SOFR option trade remains mixed, underlying futures retreating (Whites -0.020-0.030) while projected rate cuts through mid-2025 continue to cool vs. late Tuesday levels (*) as follows: May'25 at -4.7bp (-5.3bp), Jun'25 at -20.1bp (-22.1bp), Jul'25 at -36.4bp (-39.1bp), Sep'25 -53.4bp (-56.6bp).
- +10,000 2QK5 96.00/96.25/96.50 1x3x2 put flys, 2.0 ref 96.62
- +6,000 SFRZ5/0QZ5 97.00/98.00 call spd spd, 8.0 net conditional flattener
