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The central bank on April 27 reportedly purchased TRY5bn ($715mn) in debt from the Unemployment Insurance Fund, continuing its QE and pushing bond yields lower.
The central bank has bought a total of TRY33.5bn of government bonds in secondary markets since the end of March, including TRY21.6bn from the unemployment fund. Yields on government bonds have declined due to both the CBRT purchases and a decision by the BDDK banking regulator to impose a new asset-ratio rule on lenders, which analysts have said will cause private banks to ramp up buying.
Turkey’s two-year benchmark yield fell 351bp in the week ending on April 24 after the move by the BDDK. The yield on the 10-year benchmark bond was 11.84% on April 24, down from 14.13% a week earlier.
Turkey’s central bank on May 21 cut its benchmark interest rate by 50bp to 8.25% in line with market expectations. Some analysts saw it as treading carefully, not wishing to disrupt the Turkish lira’s ongoing modest recovery from the all-time low it hit on May 7.
“Today was a rare display of caution," said Phoenix Kalen of Societe Generale.
8.3 Stock market
8.3.1 Equity market dynamics
All boxes are locally and globally ticked for a second market dip on the Borsa Istanbul, which has recently been meaninglessly imitating the meaningless recovery on global equity markets.
“Markets today: You’ve the FED if you price, corona medicine [remdesivir] if you buy, now don’t bother yourself with the bad [Q1] financials,” Gokhan Uskuay of Tacirler Invest wrote in a wry April 30 tweet on the difficulties of selling rotten fruit. “The Ship of Fools lurches violently from port to starboard as all passengers on deck run to one side screaming 'SELL!' and then just as it seems the vessel must capsize, they all run back to the other shouting 'BUY',” Julian Rimmer of Investec wrote on April 29 in a note to investors.
On April 24, Bloomberg reported that gold bars were being flown 11,000 miles from Australia to New York to ease a supply squeeze. Following the first wave of corona, the idea of buying something tangible, something you can touch, may come back into fashion should enough quizzical passengers aboard the
44 TURKEY Country Report June 2020 www.intellinews.com
