Market Preview:  Global Risk Appetite Rises After U.S. Inflation Surprise

Global markets saw a renewed rise in risk appetite after U.S. inflation data for November came in well below expectations, reinforcing hopes for future monetary easing. Equity markets firmed, bond yields declined, and emerging market assets drew support, while investors remained cautious over data reliability and upcoming U.S. PCE figures.

U.S. Inflation Data Boosts Market Sentiment

Global asset prices were shaped this week by the release of U.S. November inflation data, which emerged as the most closely watched indicator for markets. Headline consumer inflation slowed to 2.7% year-on-year, well below the 3.1% consensus forecast, while core inflation eased to 2.6%, compared with expectations of 3.0%.

The readings marked the lowest inflation levels since 2021. However, analysts flagged concerns over data collection and methodology, as the U.S. government shutdown earlier this year disrupted price surveys. Sharp declines in housing-related components and the timing of data collection during the holiday season added to uncertainty around the sustainability of the disinflation trend.

TURKEY: Weekly Flow of Funds

Bond Markets Rally, CDS Spreads Narrow

Following the inflation release, global bond markets posted gains, with yields falling across the U.S. Treasury curve. While the initial rally was tempered by profit-taking later in the session, the overall tone remained constructive.

Turkish government bonds mirrored the global move. Yields across the curve declined by 5–10 basis points, while Türkiye’s five-year CDS premium fell to around 210, marking its lowest level in nearly seven years and signaling improved sovereign risk perception.

Bank of Japan Delivers Long-Awaited Rate Hike

Another key global development was the Bank of Japan’s decision to raise interest rates by 25 basis points, its first rate hike since 1995. The move, which was widely expected, underscored the persistence of inflationary pressures in Japan and reinforced the broader global divergence in central bank policy paths.

BIST 100 Holds Near Record Highs

In domestic markets, foreign investor activity remained supportive. Weekly securities data showed that non-residents purchased $25 million worth of Turkish equities, while bond purchases accelerated to $275 million.

The BIST 100 Index, trading near record highs in lira terms, maintained its short-term positive outlook. Selling pressure in the 11,450–11,500 range capped upside momentum, but buying interest around 11,250 helped limit pullbacks. In the near term, 11,250 and 11,160 are seen as key support levels, while 11,450 remains a critical resistance. Supported by the positive global backdrop, the index is expected to open higher.

FX Markets: USD/TRY Firm, EUR/USD Struggles

In foreign exchange markets, the recent weakness in the U.S. dollar index failed to translate into meaningful gains for the Turkish lira. USD/TRY continued its gradual upward trend, with 42.60, 42.70, and 42.80 watched as resistance levels.

Meanwhile, EUR/USD struggled to break above the 1.1750 resistance level, with momentum remaining weak. Although softer U.S. inflation briefly revived expectations for rate cuts, lingering doubts over data reliability led intraday rallies to fade. The pair remains above its medium-term moving averages, with 1.170 and 1.168 acting as key support levels.

Precious Metals Pull Back Despite Lower Yields

Despite falling bond yields, precious metals ended the session lower. Spot gold failed to overcome resistance near $4,400, closing down around 0.2%, while silver retreated approximately 2.5% after failing to clear the $66.80 level.

Gold’s consolidation near record highs is still viewed as technically constructive, though prices remain range-bound between $4,300 and $4,350 in the short term. For silver, $64.50 stands out as near-term support, with $66.80 as resistance.

Key Events to Watch

Markets will next focus on upcoming U.S. Personal Consumption Expenditures (PCE) inflation data, which the Federal Reserve views as its primary inflation gauge, as well as consumer confidence and housing indicators from both the U.S. and the euro zone.

Source:  QNB Invest

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