What You Need to Know Before the Market Opens (December 11)

What You Need to Know Before Market Opening (December 11)

In recent days, the most significant factor affecting global markets has been the Fed's guidance. With inflation hovering around 3%, the possibility of real interest rates approaching low levels during the new administration and sustaining the need for fiscal expansion has strengthened the perception that the Fed might take a more limited easing step than expected.

The dot plot released indicates that only a limited interest rate cut for 2026 is considered a reasonable scenario, showing how markets evaluate probabilities. The decision for a 25 basis point cut in yesterday's meeting aligned with a development already priced in by the market.

Interest Rate Cuts and Their Impact on Markets

The Fed's decision passed with a vote of 9 to 3, while Miran's view for a 50 basis point cut drew attention. In contrast, Goolsbee and Schmid expressed their preference for keeping rates steady, highlighting the division within the committee.

To reduce the tightness in short-term funding conditions, the Fed announced that it will begin purchasing $40 billion in Treasury bonds monthly starting December 12. This announcement provided rapid relief in the bond market, bringing the U.S. 10-year yield down to 4.13% and the 2-year yield to 3.52%.

While projections only foresee a single 25 basis point cut next year, the upward revisions in growth forecasts and downward updates in PCE predictions support the market's risk appetite. Fed Chair Powell managed to soften the overly hawkish perception by presenting a balanced stance during his press conference.

Developments in the Commodity Market

Significant movements are being observed in the commodity market. While spot gold slightly retreated from a week-long peak, silver tested record levels with a more than 100% premium since the beginning of the year. U.S. futures came under pressure due to Oracle's earnings not meeting expectations. Particularly, banking stocks were at the center of selling throughout the day.

Brent crude stabilized around $62 amid tensions between the U.S. and Venezuela. The weakening of the dollar index below 99 caused the euro/dollar exchange rate to rise to 1.17.

Important Developments for Investors

While Borsa Istanbul started the previous trading day on a buying trend, it could not maintain its gains throughout the day due to an increasing cautious stance. The BIST 100 closed down 0.40% at 11,194 points. The Central Bank of Turkey's interest rate decision to be announced today continues to be the focal point of the market.

The new day is expected to be a week with increased volatility, and the Central Bank's interest rate decision is anticipated to resonate in the markets. Additionally, geopolitical issues and domestic political developments may have an impact on pricing.