TURKEY: Goldman Sachs Expect 200bp Cut at Sept Meeting (Prev. 300bp)
- Goldman Sachs have joined the growing list of sell-side analysts expecting a sub-300bp CBRT rate cut at next week’s meeting. They write that they expect the central bank to approach policy with greater caution next week and now anticipate a 200bp policy rate cut (from their previous 350bp call). Both JP Morgan (see more here) and Morgan Stanley have shifted their calls to a 200bp cut as well.
- Providing rationale for their view change, Goldman Sachs note that Q2 GDP growth far surpassed expectations and August inflation coming in higher than forecast. Second, they say “the recent judicial ruling on 2 September to annul the CHP's regional party congress in Istanbul increases the likelihood that the court hearing the case on the annulment of the last CHP national congress.”
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EQUITY TECHS: E-MINI S&P: (U5) Corrective Pullback Extends
- RES 4: 6523.63 1.764 proj of the May 23 - Jun 11 - 23 price swing
- RES 3: 6500.00 Round number resistance
- RES 2: 6477.31 1.618 proj of the May 23 - Jun 11 - 23 price swing
- RES 1: 6468.50 High Jul 31 and the bull trigger
- PRICE: 6358.00 @ 16:20 BST Aug 6
- SUP 1: 6244.36 2.0% 10-dma Envelope
- SUP 2: 6239.50 Low Aug 1
- SUP 3: 6213.75 50% retracement of Jun - Aug Upleg
- SUP 4: 6203.65 50-day EMA
Equities sold off sharply Friday on the back of the soft NFP print - pushing prices through mid-July lows in the process. Since that spell of weakness, price has traded either side of support at the 20-day EMA, at 6325.25, signalling scope for a deeper retracement toward the 50-day EMA at 6203.65. Clearance of this average is required to signal a stronger reversal. The primary trend remains up, leaving key short-term resistance and the bull trigger at 6468.50, the Jul 31 high.
FED: US TSY 17W AUCTION: NON-COMP BIDS $587 MLN FROM $65.000 BLN TOTAL
- US TSY 17W AUCTION: NON-COMP BIDS $587 MLN FROM $65.000 BLN TOTAL
FED: Kugler Replacement Could Be Lined Up To Vote For September FOMC Cut
The Bloomberg report on Trump potentially naming a placeholder candidate for the remainder of Gov Kugler's Board term (to January) leads to the conclusion that if the administration can get a pre-vetted candidate confirmed very quickly, that newly-installed governor can vote (and likely for a cut) at the September FOMC. Though attendance at the Jackson Hole symposium on Aug 21-23 might be a little tight.
- This approach to filling Kugler's spot isn't a major surprise: Trump mentioned the possibility of naming somebody to fill the position temporarily, separately from the decision about choosing a Fed chair. He has said there are "a couple of candidates" under consideration for the Kugler replacement, but hasn't named them.
- There was one hint in the report about the possible candidate: "likely to be someone who is already in the government and who has previously been confirmed by the Senate for a federal job", which narrows it down to about 300 people if it means that they were confirmed in the current Senate session and/or they are serving in termed positions/held over from previous administrations, per Washington Post data. Link here.
- If the Bloomberg report is true, it means that the White House isn't yet appointing a so-called "shadow" Fed Chair, which would have made FOMC policymaking and communications increasingly awkward.
