Weekly Tracker: Sep 27-Oct 3
It wasn’t a Happy Id of Sacrifice for Turkey, as PKK killed 6 security personnel and wounded many. In the run-up to the November 1st elections, we predict more terror attacks and a vicious insurgency in the Kurdish cities. Meanwhile, AKP is losing support as a result of its crackdown to put down the insurgency. Its response is a scheme approved by local election boards to ferry voters across town to “safe zones”, which will be tested for constitutionality by the High Election Board this week.
We report on two new polls with opposite findings. AKP is either very close to victory, or gradually drifting to sub-40%. We think the latter case is more likely.
There is almost nothing to report on the econ front from this holiday-shortened week, so we defer an assessment of the latest state of affairs on the economy to our upcoming monthly report, to be released later this week. As expected, the Monetary Policy Committee left all rates unchanged last week, showing no sign of concern over an ever-weakening lira or the secular deterioration in inflation expectations. As we noted in a brief during the week, we continue to think that the Bank will try staying on this auto-pilot mode a while longer, but that a bolder move, like a significant hike of the O/N lending rate, will be inevitable sometime before the end of the year.
A host of indicators this week will give us some clues on the state of the real economy (see calendar inside for the full list). A key release of the week concerns the August trade data, which, based on the preliminary Ministry of Customs and Trade figures released earlier, should shrink by over $3 billion in August in 12-month rolling terms, about a third of which should come from a narrowing of the core (overall balance less energy/gold) deficit.
Cosmo heralds that the final sell-off in Turkish assets is at hand, thanks to a negligent CBRT and vigilant Fed.
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