Page 7 - TURKRptFeb22

2.0 Politics 2.1 Watchlist
● Global liquidity: The Fed’s balance sheet is still breaking records. It is approaching $9 trillion, up from $7 trillion in May 2020, $4 trillion in Q1 2020 and $900bn in June 2008.
The end of the new-year rally has already begun. The “trailer” for the Fed tightening drama is currently on “screens”.
May, August and November this year could bring blood red markets. The US 10-year government bond yield is sailing through the
2.00-level.
The USD index (DXY) rose into the 97s but it sharply fell into the 95s on February 3 after the European Central Bank (ECB) kept its policy rate on hold at zero and the Bank of England (BoE) hiked its policy rate by 25bp to 0.5%.
On January 26, the Fed said that it would cut its monthly net money printing volume by $30bn to $30bn in February from $60bn in January.
It plans to zero the net money printing in March.
The previous schedule, released in December, suggested zero in April rather than March.
Governor Jerome Powell’s press conference brought the real sensation:
- The Fed may hike its policy rate at its next meeting, to be held in March.
- It may begin reducing its balance sheet later this year after the rate hikes begin.
In December, the Fed governors expected the delivery of three rate hikes in 2022 that will bring the policy rate up to 0.75-1.00% from the current 0.00-0.25%.
On March 16, the Fed’s open market committee will announce the results of its next meeting along with updated projections by the governors.
7 TURKEY Country Report February 2022 www.intellinews.com