Page 5 - TURKRptAug22

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 July 26, it
stood at $8.89 trillion.
The Fed remained stuck to its guidance at its July meeting. August will still be a stressful month in financial markets due to summer liquidity dry.
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 magically remains below the 3%-level while the USD index (DXY) tested 109 on July 14.
The US yield curve is again inverted. Fed and the US government deny it but the US is in technical recession as of Q2. When recession happens under high inflation, it is called stagflation.
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, the ECB delivered a 50bp rate hike versus expectations of 25bp.
On September 8, at its next rate-setting meeting, the ECB will certainly deliver another rate hike and it may be 50bp.
The EUR/USD tested below the 1.00-level.
The spread between Italy 10-year and Germany 10-year papers
remains above the 200bp-level.
On June 15, the ECB held an emergency meeting. It said that it would continue buying stressed government papers.
Inflation in the Euro Area extended its record-breaking series to a ninth consecutive month with 8.9% y/y in July. Producer price inflation
5 TURKEY Country Report August 2022 www.intellinews.com