OPINION
Market Rating Before FOMC MeetingJan 31
Are the Recoveries in Global Markets Permanent?
The international assets, which have been experiencing strong selling pressure recently, have turned to the recovery path with the beginning of the week.
International assets had been under pressure for a long time, with the US Federal Reserve's (FED) aggressive interest rate hike stance against persistent inflation.
One step behind: The FED, which started its interest rate hike path in March, increased the federal fund target to the range of 3.25-3.50 percent with 25, 50, 75, 75, and 75 basis points interest increases, respectively.
On the other hand, the hawkish messages put forward by the FED Board Members in a strong tone increased the weight of the dollar on developed country currencies and assets with high-risk sensitivity. At this point, it was critical that the benchmark US 10-year bond yields reached 4.02%, the highest level since April 2010.
However, there has been an improvement in the global risk atmosphere since the beginning of the week. Especially, the effect of the production purchasing managers index (PMI), which was reported yesterday by IHS Markit and S&P Global for the USA, with 52.0 points in September, indicating that the country's economy is resistant compared to developed countries, has a great impact.
From this point of view, VIX, the indicator of global investor sentiment, fell below the threshold of 30 points again. SP500, which is in the leading position in international stock markets, erased its losses since 28 September with 3 734 points. Ounce gold, which opened the week from 1662, also recovered to the level of 1709 with a gain of almost 3%.
The answer to the question of whether the recovery will be permanent or not is in the non-farm payrolls (NFSP) data to be released by the US Department of Labor on Friday. There is a market expectation of 250 thousand considering the data. A moderate NFP of 250 thousand could support the recovery in assets by contributing to the improvement in investor risk appetite in the markets. If the NFP exceeds market forecasts, with the prediction that the labor market is extremely tight in the world's largest economy, it could increase the dollar's pressure on assets again, increasing the probability that the FED will maintain its 75 basis point momentum in monetary tightening.
International assets had been under pressure for a long time, with the US Federal Reserve's (FED) aggressive interest rate hike stance against persistent inflation.
One step behind: The FED, which started its interest rate hike path in March, increased the federal fund target to the range of 3.25-3.50 percent with 25, 50, 75, 75, and 75 basis points interest increases, respectively.
On the other hand, the hawkish messages put forward by the FED Board Members in a strong tone increased the weight of the dollar on developed country currencies and assets with high-risk sensitivity. At this point, it was critical that the benchmark US 10-year bond yields reached 4.02%, the highest level since April 2010.
However, there has been an improvement in the global risk atmosphere since the beginning of the week. Especially, the effect of the production purchasing managers index (PMI), which was reported yesterday by IHS Markit and S&P Global for the USA, with 52.0 points in September, indicating that the country's economy is resistant compared to developed countries, has a great impact.
From this point of view, VIX, the indicator of global investor sentiment, fell below the threshold of 30 points again. SP500, which is in the leading position in international stock markets, erased its losses since 28 September with 3 734 points. Ounce gold, which opened the week from 1662, also recovered to the level of 1709 with a gain of almost 3%.
The answer to the question of whether the recovery will be permanent or not is in the non-farm payrolls (NFSP) data to be released by the US Department of Labor on Friday. There is a market expectation of 250 thousand considering the data. A moderate NFP of 250 thousand could support the recovery in assets by contributing to the improvement in investor risk appetite in the markets. If the NFP exceeds market forecasts, with the prediction that the labor market is extremely tight in the world's largest economy, it could increase the dollar's pressure on assets again, increasing the probability that the FED will maintain its 75 basis point momentum in monetary tightening.
