Page 8 - TURKRptMar22

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.
Tension is growing but the markets seem to have evaded a turbulent end of the new-year rally.
May, August and November this year could bring blood red markets. On February 10, the yield on 10-year US Treasury papers surpassed
the 2%-level but it then fell to the 1.70-1.80%s after February 24.
The USD index (DXY) rose to the 99s.
Europe had also embarked on talking about ending its more than a decade long ultra-easy monetary policy. Thanks to the Ukraine war, expectations for a rate hike have been pushed to 2023. No rate hike in 2022.
Inflation in the Euro Area extended its record to 5.8% y/y in February after breaking out to 5.1% in January. Producer price inflation reached 31% in January.
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.
8 TURKEY Country Report March 2022 www.intellinews.com