TURKEY: PKK Begins Weapons Handover After Ending Decades-Long Insurgency
The Kurdistan Workers' Party (PKK) militant group has begun a ceremonial handover of weapons in the city of Sulaymaniyah in the semi-autonomous Kurdistan region of northern Iraq. Observers from Turkey, Iraq’s central government and the Kurdistan Regional Government are present to oversee the handover. The disarmament and the disbanding of the PKK after 40 years of armed conflict against the Turkish gov't came as the group's leader, Abdullah Ocalan, called for a “transition from the phase of armed conflict to the phase of democratic politics and law" in a recorded video message from prison.
- Bloomberg reports, "Peace could also boost Turkey’s economy, with policymakers saying that the conflict has cost the country around $1.8 trillion including lost opportunities due to military spending." The administration of Turkish President Recep Tayyip Erdogan has said that the disarmament and disbanding process should take only five months.
- While Ocalan is the long-time leader of the PKK, the sprawling group is formed by many factions, and it is unclear if all are on board with the disarmament. Moreover, there remains a huge amount of mutual distrust between the Erdogan administration and the militant and political groups that claim to represent Turkey's sizeable Kurdish minority.
- The long-term political implications are also unclear. Kurds, forming ~15-20% of the Turkish population, have been ostracised from the political process for decades. It remains to be seen whether such a group could ever back Erdogan or his Islamist nationalist Justice and Development Party (AKP), or of the Kurdish-interest DEM Party could support the AKP.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
ECB: Further Currency Shifts May Strengthen Euro’s Global Role
- The ECB has published its annual report into the euro. President Lagarde’s foreword notes that:
- “The euro continued to hold its position as the second most important currency globally” in 2024.
- “Further shifts may be underway in the landscape of international currencies. The tariffs imposed by the US Administration have led to highly unusual cross-asset correlations. This could strengthen the global role of the euro and underscores the importance for European policymakers of creating the necessary conditions for this to occur.”
- “The number one priority must be advancing the savings and investment union to fully leverage European financial markets. […] The planned issuance of bonds at the EU level – as Europe takes charge of its own defence – could make an important contribution to achieving these objectives.”
- The report goes on to note that “the share of gold in global foreign reserves at market prices, at 20%, surpassed the share of the euro (16%). Survey data suggest that two-thirds of central banks invested in gold for purposes of diversification, while two-fifths did so as protection against geopolitical risk.”
- Euro strength has received close attention from policy makers since its decoupling with factors such as rate differentials, something that first started with EU/German defence and infrastructure investment plans before kicking up a gear with US reciprocal tariff announcements in April.
- The holding of relatively high EUR/USD rates (currently 1.1436) appears to have given Governing Council members added confidence that a deposit rate of 2%, reached after last week’s 25bp cut for 200bp of easing for the cycle, leaves policy in a good place with implications of a pause ahead.
- Lagarde has previously talked on the potential benefits of a growing global role. This from May 26: “Increasing the international role of the euro can have positive implications for the euro area. It would allow EU governments and businesses to borrow at a lower cost, helping boost our internal demand at a time when external demand is becoming less certain.”
US TSY OPTIONS: FVN5 107.50 Puts Now Sold
FVN5 107.50 puts continue to trade, with ~5K given at 0-13+ over several clips after the previously covered buying at 0-14. Volume in the contract tops 12K on the session.
COMMODITIES: WTI Futures Extending Current Bull Cycle
WTI futures have traded higher this week, extending the current bull cycle. The contract has cleared the 50-day EMA, signalling scope for an extension towards $67.14 next, a Fibonacci retracement. It is still possible that the recovery since early May is a correction. MA studies are in a bear-mode position, highlighting a dominant M/T downtrend. Support to watch lies at $59.74, the May 30 low. A break would highlight a potential bearish reversal. A bullish theme in Gold remains intact and the latest pullback appears corrective. Medium-term trend signals remain bullish - moving average studies are in a bull-mode position, highlighting a dominant uptrend. A resumption of gains would refocus attention on $3435.6 next, the May 7 high. A break of this hurdle would strengthen bullish conditions. On the downside, the next support to monitor is $3245.6, the 50-day EMA.
- WTI Crude up $0.17 or +0.26% at $65.19
- Natural Gas up $0.03 or +0.74% at $3.558
- Gold spot up $21.61 or +0.65% at $3346.06
- Copper down $4.25 or -0.87% at $485.7
- Silver down $0.02 or -0.06% at $36.5246
- Platinum up $42.47 or +3.48% at $1262.98
