Turkey Wake-up call: Macro, Political and Equity News, 27th January

BIST climbed 0.31% yesterday after a day entirely spent in positive territory although it reversed a good part of its earlier gains. Banks lagged the broader market with the 0.27% drop in their sector index. Aviation stocks, TKFEN, PETKM, AGHOL, LOGO, KORDS, and NTHOL led the gainers among the BIST100 constituents while FROTO, TCELL, ENKAI, HALKB, VESBE, DOAS, and INDES were some of the weak spots. Today, our macro agenda is busy starting with Central Bank governor Sahap Kavcioglu's presentation of the bank's quarterly inflation assessment report in a press conference starting at 10:30AM local time. The bank had predicted year-end CPI at 11.8% for 2022 and at 7.0% for 2023 in its previous assessment report in October. Some major upward revisions to these forecasts are almost certain given the surge in inflation and lira depreciation during the past couple of months while the latest survey of market expectations suggested 29.75% and 15.54% respective consumer inflation rates for end-2022 and the 24-months ahead. Separately, summary minutes of the latest Monetary Policy Council meeting will be released at 2PM. Lastly, Treasury will offer 3-year gold bonds and 3-year gold-indexed sukuk papers in direct sales today, wrapping up this month's heavy borrowing programme. Domestic redemption is TL12.50bn for the week while the total for the month stands at TL49.21bn vs a domestic borrowing target of TL45.8bn while Treasury has already raised TL43.8bn in the seven auctions/placements held so far. BIST seems headed for a negative start given the sour sentiment in global markets following the FED statements last night. U.S. futures are down 1.3% in early trades on top of the 1.7-1.9% overnight losses in main indices after we left and Asian markets are trading visibly in the red. Lira is a bit weaker with the USDTRY pair cruising over the 13.61 mark in early trades vs 13.5927 at yesterday's BIST closing bell.