TURKEY: Significant Jump in Monthly Inflation Threatens CBRT Easing Plans
Consumer prices rose 3.23% m/m in September, well above expectations of a more moderate +2.58% rise (Prior: +2.04). That translates to a +33.29% year-on-year print, above last month’s +32.95% reading and expectations of a moderation to +32.45%.
- Among the CPI subcategories, ‘Education’ prices recorded the highest annual increase, rising 66.10% y/y, followed by ‘Housing’ prices at 51.36% y/y. ‘Food and non-alcoholic beverages’ prices rose 36.06% y/y (contributing 8.6ppts to the total headline figure) while ‘Transport’ prices rose 25.3% y/y (with a 4.15ppt contribution to annual inflation).
- Given the start of the school season in September, strong price increases across education and transport prices had been anticipated - the +17.90% m/m increase in education prices stands out in September (clothing and transport prices rose a monthly 3.92% and 2.81%, respectively). Meanwhile, adverse weather conditions were also expected to keep food prices elevated.
- Nonetheless, the much higher than consensus print casts doubt on the CBRT’s monetary easing cycle. Last month, it slightly slowed the pace of rate cuts to 250bps, bringing the one-week repo rate to 40.50%. The Bank underlined its data dependent approach, noting that any step adjustments to the policy rate will be decided meeting-by-meeting in response to inflation developments. The central bank meet next on October 23.
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GILTS: Still Under Pressure
A negative open for gilts despite the recovery from worst levels in Bunds, as weakness in T-notes weighs.
- Futures break yesterday’s low (89.60). Fibonacci support is nearby (89.46), with bears remaining in technical control.
- Yields 2-3bp higher across the curve, steepening theme intact.
- 10s closed at 4.80% yesterday, seeing the first print above that level since late March. January highs (4.921%) present the next upside target there.
- 30s trade through yesterday’s fresh multi-decade high.
- That comes as ongoing fiscal worry, some questions surrounding the future of Chancellor Reeves and the potential Budget date (26 November touted) dominate locally.
- Final UK services PMI data is due today.
- Elsewhere, BoE’s Bailey, Lombardelli, Taylor & Greene will appear in front of the Treasury Select Committee. We will provide a little more on that in due course.
- Note that BoE’s Breeden will speak this morning, although the setting of the address (a “money & payments” conference) may limit scope for comments on monetary policy.
SILVER TECHS: Holding On To Its Latest Gains
- Holding On To Its Latest GainsRES 4: $40.323 - 2.000 proj of the Apr 7 - 25 - May 15 swing
- RES 3: $42.000 - Round number resistance
- RES 2: $41.064 - 1.764 proj of the Apr 7 - 25 - May 15 swing
- RES 1: $40.977 - Intraday high
- PRICE: $40.817 @ 08:16 BST Sep 3
- SUP 1: $38.804 - 20-day EMA
- SUP 2: $37.787 - 50-day EMA
- SUP 3: $36.216 - Low Jul 31 and a key support
- SUP 4: $35.285 - Low Jun 24
Trend signals in Silver remain bullish and the metal has traded sharply higher this week. Resistance at $35.930, the Jul 23 high, has been cleared. This confirms a resumption of the uptrend and maintains the price sequence of higher highs and higher lows. Moving average studies are in a bull-mode position, reinforcing current trend conditions. Sights are on $41.064 next, a Fibonacci projection. Initial support to watch is $38.804, the 20-day EMA.
MNI: SPAIN AUG SERV PMI 53.2 (54.5 FCAST, 55.1 JUL)
- MNI: SPAIN AUG SERV PMI 53.2 (54.5 FCAST, 55.1 JUL)
