Page 6 - TURKRptJul22

2.0 Politics 2.1 Watchlist
● Global liquidity: The Fed’s balance sheet stopped breaking records. A record $8.97 trillion was registered as of April 12. As of Jun 21, it
stood at $8.93 trillion.
A bloody period began in May. The Fed did not allow markets to take a breather in June.
Its July meeting is at the end of the month. It may again prefer to trigger a big tumult in August.
With its June move, the Fed confirmed that it is serious in wanting a sharp downturn in financial asset prices. It believes that inflation will eventually decline and it will continue stimulating the US economy.
November, prior to the beginning of the new year rally in December, could also be bloody this year.
The yield on 10-year US Treasury papers tested 3.50% on June 14 (before declining below the 3-level on July 1) while the USD index (DXY) tested 106 on June 15.
The US yield curve is again tending to invert. Fed governor Jerome Powell denies that the Fed wants a recession but its moves will inevitably trigger a sudden stop in the US economy.
European Central Bank
On June 9, the European Central Bank (ECB) said that it would end its bond-buying programme as of July 1.
On July 21, at its next rate-setting meeting, the ECB will deliver a 25bp rate hike.
On September 8, the ECB will certainly deliver another rate hike and it may be 50bp, the authority also said.
The EUR/USD tested below the 1.04-level once more. The ECB is not doing enough to deal with inflation and its governor Christine Lagarde appears unable to give the correct messages to the market.
6 TURKEY Country Report July 2022 www.intellinews.com