Page 6 - TURKRptJun22

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 May 31, it
stood at $8.92 trillion.
A bloody period began in May. Under normal conditions, markets should take a breather in June and July prior to the next tumult in August.
However, the current situation is beyond the normal. It cannot be avoided that a dizzying meltdown could soon be playing in ‘market theatres’.
The Fed wants 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 surpassed the 3.00%-level on April 27 while the USD index (DXY) surpassed the 100-level on the same day. The US yield curve remains normal.
On May 11, European Central Bank (ECB) governor Christine Lagarde implied that the authority may end its bond-buying programme at its next rate-setting meeting, to be held on June 9, and deliver a rate hike at the subsequent meeting, to be held on July 21.
The local minimum on the EUR/USD chart was pinned at 1.0350 on May 13.
On May 23, Lagarde came up with a blog post saying that she expects the bond-buying programme to end very early in Q3 (June 9). A rate lift-off would follow in July and the negative policy rate would end by end-Q3, according to Lagarde.
On May 24, the EUR/USD surpassed the 1.07-level.
6 TURKEY Country Report June 2022 www.intellinews.com