EM CEEMEA CREDIT: TURKEY: Deposit and Loan Rates Remain Elevated
[MNI Macro]
• Ekonomi run a piece in which they note that the high September inflation reading and CBRT Governor Karahan’s recent hawkish messaging has fuelled expectations that monetary policy tightness will be maintained for some time. They write that expectations that rate cuts will be paused or scaled back at the October 23 meeting have led the banking sector to maintain high loan and deposit rates. The newspaper add that year-end policy rate forecasts, which had previously been around 35-37%, were raised to a range of 37-39%. The one-week repo rate currently stands at 40.50%.
• Treasury and Finance Minister Mehmet Simsek will attend the annual meetings of the G20, IMF and World Bank in Washington. According to Hurriyet, Simsek is expected to attend about 60 meetings during his visit. He will participate in investor conferences organised by investment banks and hold one-on-one meetings with investors.
• The Treasury & Finance Ministry publishes budget data for September at 09:00BST/11:00 local time. President Erdogan chairs a cabinet meeting in the afternoon.
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EQUITIES: ROLL PACE - Triple Witching Friday
EQUITY ROLL PACE: Some might favour rolling earlier, ahead of the FOMC.
US:
- ESA: 26%.
- NQA: 13% (below pace).
- DOW: 20% (below pace).
EU:
- VGA: 10% (below pace).
- Banks: 7% (below pace).
- Stoxx600: 9% (below pace).
- Dax: 10% (below pace).
- FTSE: 13% (below pace).
EGBS: OATs Lag Iberians As Ratings Convergence Continues
Friday’s rating actions help drive moves in EGB spreads early today, with Spanish (S&P upgraded Spain to A+; Outlook Stable) & Portuguese (Fitch upgraded Portugal to A; Outlook Stable) 10s flat vs. Bunds, while French paper is ~1.5bp wider (Fitch downgraded France to A+; Outlook Stable).
- Friday’s moves underscored the idea of rating convergence between France & the Iberians, given the political and fiscal risk evident in the former.
- The 10-Year Spain/France/Portugal fly is on track for a fresh cycle closing low, trading through -23bp.
- We highlighted the likelihood of the moves for both France and Portugal last week.
- Commerzbank suggests that the fallout for OATS is “likely to be limited, given that OATs are already trading markedly cheaper than double-A or single-A rated peers. While some investors may start to reduce single-A OAT exposure, others may use average ratings, adjust the rating thresholds in their EGB benchmarks, or utilise more attractive spread levels. We close our tactical OAT-Bund spread tightening view and turn neutral for the time being”.
Fig. 1: 10-Year Spain/France/Portugal Butterfly (bp)
SILVER TECHS: Continues To Appreciate
- RES 4: $43.000 - Round number resistance
- RES 3: $42.974 - 2.382 proj of the Jul 31 - Aug 14 - 20 price swing
- RES 2: $42.606 - 2.236 proj of the Jul 31 - Aug 14 - 20 price swing
- RES 1: $42.464 - HIgh Sep 12
- PRICE: $42.160 @ 08:13 BST Sep 15
- SUP 1: $40.195 - 20-day EMA
- SUP 2: $38.745 - 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. The metal traded higher Friday and this delivered a fresh cycle high. The extension 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 $42.606 next, a Fibonacci projection. Initial support to watch is $40.195, the 20-day EMA.
