TURKEY: Goldman Sachs Think Risk of Further Reserve Losses is Low
May-29 09:23
- The success of the Turkish stabilisation programme has typically been assessed on two metrics, Goldman Sachs say: the increase in the CBRT’s reserves and the decline in annual inflation. On current numbers, the programme appears to have been ineffective. Inflation is running at a similar level to May 2023 and gross FX reserves have fallen close to the level at the beginning of the programme.
- However, Goldman Sachs argue that such scepticism is misplaced. Although net FX reserves have fallen meaningfully, appropriately measured they are still significantly healthier than in 2023. Moreover, the most important driver of the increase, the Turkish private sector's increased preference to save in TRY, has not reversed.
- In their view, the reserve loss since March was almost entirely driven by foreign outflows. With foreign positioning now very light and a small current account deficit, Goldman Sachs think the risk of further reserve losses is low.
- Goldman Sachs also note that it is plausible that the CBRT has decided not to focus on a rebuild of reserves on carry-driven foreign inflows. Hence, depreciating the TRY might be partially a policy aimed at keeping that money out.
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ITALY AUCTION RESULTS: 5/10-year BTP and CCTeu
Apr-29 09:14
| 2.95% Jul-30 BTP | 3.60% Oct-35 BTP | 1.10% Apr-33 CCTeu | |
| ISIN | IT0005637399 | IT0005648149 | IT0005620460 |
| Amount | E3.5bln | E4bln | E2bln |
| Previous | E3bln | E1.5bln | |
| Avg yield | 2.74% | 3.62% | 3.27% |
| Previous | 3.05% | 4.11% | |
| Bid-to-cover | 1.52x | 1.58x | 1.66x |
| Previous | 1.58x | 1.74x | |
| Avg Price | 101.07 | 100.09 | 100.53 |
| Pre-auction mid | 101.058 | 100.449 | |
| Prev avg price | 99.64 | 100.25 | |
| Prev mid-price | 99.585 | 100.179 | |
| Previous date | 28-Mar-25 | 28-Mar-25 |
GREECE T-BILL AUCTION RESULTS: 13-Week GTB
Apr-29 09:13
| Type | 13-week GTB |
| Maturity | Aug 1, 2025 |
| Amount | E500mln |
| Target | E500mln |
| Previous | E500mln |
| Avg yield | 1.85% |
| Previous | 2.03% |
| Bid-to-cover | 1.78x |
| Previous | 1.91x |
| Previous date | Apr 02, 2025 |
FOREX: Greenback Firmer as Trump Team Look to Shift Focus to Taxes
Apr-29 09:13
- The greenback is firmer, reversing a small part of the minor losses posted into the Monday close. Flow remains a key driver for currency markets here, with price action yesterday consistent with flow drivers marked by month-end value date on Monday. Most corporate and rebalancing flow models point to USD buying for the end of April, which may be showing through in the price action so far Tuesday, given the minimal headline flow.
- Trump's schedule is pretty contained Tuesday, keeping focus on any reports concerning the progress of trade deals - as cabinet members continue to talk up the prospects of deals with Asian nations - and in particular India - which could be the first agreements to cross the line and avoid a return of sky-high tariffs.
- Treasury Secretary Bessent - seen as the most market-friendly member of Trump's cabinet met yesterday with several senior members of Trump's economic team to make the passage of tax legislation a top priority for the party. The meeting set July 4th as a key date going forward, the date by which the team look to achieve the tax overhaul and reset the public's view that this administration has a poor grasp on the economy.
- The USD is firmer against all others in G10, but CAD also trades well following the election results that show Carney's Liberals extending their time in office. EUR/CAD is holding below the 1.5800 handle, keeping the shallow bounce theme and raising the importance of 1.5668 support ahead.
- Event risk picks up Tuesday with the publication of April economic confidence data from the Eurozone and the advance trade balance release, JOLTS job openings for March and the latest consumer confidence data from the US. Central bank speak is still contained as the Fed remain inside their pre-meeting media blackout period. ECB's Villeroy and BoE's Ramsden are set to speak, however.
