TURKEY: Yields on Local Bonds Rise as Markets Price in Higher Inflation
Apr-30 07:30
- Bloomberg run a piece in which they note that the weighted average cost of funding from the central bank rose to its highest level this year – to 48.8% as of Monday – indicating that policymakers want to keep a tighter stance to counter demand for dollars. The central bank pushes the average funding cost above the benchmark rate by witholding funding at the one-week repo rate, forcing banks to access funding from the higher overnight rate.
- Meanwhile, Ekonomi note that the selling of Turkish assets – sparked by the arrest of Istanbul mayor Ekrem Imamglu on March 19 – has continued, with the yield on 10-year TRY bonds at a record high. Experts who spoke to the newspaper stated that there is no longer a possibility of inflation remaining within the central bank's forecast range, while it is becoming increasingly clear that the headline rate will end the year above 30 percent. These expectations will likely be reflected in the CBRT’s next inflation report on May 22.
- Turkey’s trade deficit narrowed to $7.196bln (Est: -$7.3bln) in March from a revised deficit of $7.78bln in February – the narrowest deficit of the year so far. Exports rose 3.4% y/y while imports rose 2.2% y/y.
- The Culture & Trade Ministry publishes tourist arrivals data for March at 09:00BST/11:00 local time while President Recep Tayyip Erdogan addresses his party’s lawmakers in Ankara.
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GILTS: Rallying On Wider Risk-Off Flow, Bullish Technical Threat Increases
Mar-31 07:28
Gilts through last week’s highs on the wider risk-off price action stemming from U.S. tariff worry ahead of “Liberation Day”.
- Futures peak at 92.10 before fading back below 92.00, still up the best part of 50 ticks on the day.
- Note that the short-term technical trend in the contract remains bearish, but the bullish threat has increased.
- Initial Fibonacci resistance (92.17) protects trendline resistance drawn off the March 4 high (91.55).
- Yields 2.5-4.0bp lower, 10s outperform on the curve.
- GBP STIRs still around levels we flagged ahead of the gilt open, as most of the early dovish adjustment holds.
- The DMO will hold its consultations regarding FQ1 (April to June) issuance at 15:30BST (investors) and 17:00BST (GEMMs) today.
- We set out our expectations for gilt issuance across FY25/26 in our UK Issuance Deep Dive publication.
- Elsewhere, only lower tier UK economic data is due on Monday, which will leave macro cues at the fore for much of the session.
EFSF ISSUANCE: New 5-year: Guidance
Mar-31 07:25
- EUR Benchmark of the new 5y May-30 MS+32 Area
- Coupon: Annual, act/act, long first
- ISIN: EU000A2SCAT6
- Maturity: May 7, 2030
- Format: Reg S, bearer, 0% rw
- Issuer: European Financial Stability Facility (EFSF)
- Bookrunners: Citi, CA-CIB (B&D), SocGen
- Settlement: April 7, 2025
- Timing: May price today.
Details via Bloomberg
SILVER TECHS: Bullish Trend Sequence
Mar-31 07:24
- RES 4: $35.736 - 1.236 proj of the Feb 14 - Apr 12 - May 2 ‘24 swing
- RES 3: $34.903 - High Oct 23 ‘24 and the bull trigger
- RES 2: $34.548 - High Oct 29 ‘24
- RES 1: $34.501 - Intraday high
- PRICE: $34.355 @ 08:23 BST Mar 31
- SUP 1: $33.304 - 20-day EMA
- SUP 2: $32.665 - Low Mar 21
- SUP 3: $32.483/31.814 - 50-day EMA / Low Mar 11
- SUP 4: $30.815 - Low Feb 28 and key support
Bullish conditions in Silver remain intact and last week’s gains reinforce this condition. The rally resulted in a breach of $34.233, the Mar 18 high and a bull trigger. This confirms a resumption of the uptrend and maintains the bullish price sequence of higher highs and higher lows. Sights are on $34.903, the Oct 23 ‘24 high and a medium-term bull trigger. Initial firm support to watch is $33.3004, the 20-day EMA.
