TURKEY: Larger-Than-Expected Revision to CBRT Year-End Inflation Forecast Range
- The CBRT maintained its forecast range for end-2026 inflation (13-19%) but raised the range for 2025 (from 25-29% to 31-33%) in its quarterly inflation report. The increase in the latter was perhaps slightly more than was expected – local press had been anticipating only a 1-2ppt increase – but puts the central bank’s forecasts more inline with market expectations. Meanwhile, the interim target for end-2026 inflation was unchanged at 16% - as was expected.
- Governor Fatih Karahan maintained a hawkish tone in his comments. He said the central bank remains ready to tighten further if needed but continues to expect inflation to slow down steadily. October CPI inflation data cooled more than expected to 32.9% following a surprise acceleration in September and that is seen clearing the way for another 100bp rate cut at the final meeting of the year in December.
- Separately, Finance Minister Mehmet Simsek denied reports circulating on social media that he was seriously ill and planning to step down. “I don’t have any chronic illnesses, nor do I have any illnesses that require close monitoring,” Simsek said Thursday while responding to questions.
- The Treasury & Finance Ministry publishes budget balance data for October this afternoon. No other data releases are scheduled for today.
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FOREX: FX OPTION EXPIRY
Of Note:
EURUSD 1.28bn at 1.1650.
EURUSD 1.7bn at 1.1650 (fri).
AUDUSD 1.1bn at 0.6545/0.6550 (fri).
AUDUSD 1.01bn at 0.6500 (tue).
- EURUSD: 1.1600 (370mln), 1.1625 (325mln), 1.1650 (1.28bn), 1.1660 (250mln), 1.1675 (285mln), 1.1700 (1.21bn).
- USDJPY: 152.00 (308mln).
- USDCAD: 1.3975 (392mln), 1.4000 (300mln).
SOFR: SFRZ6/H7 Lifted
SFRZ6/H7 paper paid -0.5 on ~6.6K, taken bid over for the balance of an 8K order, with another ~1.1K lots trading on the follow. Small bid left.
FRANCE: Suspension Of Pension Reform Would Risk Intra-Coalition Rancour
Caretaker Prime Minister Sebastien Lecornu, speaking outside Matignon after the first day of meetings with various political parties in an effort to break through the country's political paralysis, claims that "talks so far are showing a willingness to get this budget through by year-end". Lecornu will present his findings to President Emmanuel Macron later this evening. Adds, "Reducing the deficit is key for France's credibility."
- As noted earlier, there have been some signals that the caretaker administration is considering rolling back Macron's flagship pension reforms in order to gain support from the centre-left Socialist Party (PS).
- Lecornu says that among parties of the centre and centre right, "there is a desire to have a budget for France before December 31 of this year," adding, "This desire creates a movement and a convergence, obviously, which removes the prospects of dissolution."
- The caretaker PM meets with representatives of the PS at 09:00BST/10:00CET, the environmentalist Ecologists at 11:15BST/12:15CET and the left-wing Communists later in the day.
- Education Minister and former PM Elisabeth Borne's raising of the prospect of suspending the 2023 pension reform may draw PS support for a budget, but risks rancour with the right of the governing coalition. Arnaud Pericard, spokesperson for the centre-right Horizons, said to FranceInfo, "I understand that it is being put forward, but it is not a good idea," with the conservative Les Republicans (LR) also likely to object. Should Horizons and LR vote down (rather than abstain) on any repeal, their votes would outweigh those of the PS.
