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

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

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

The announced dot plot showing only a limited interest rate cut for 2026 is indicative of how the markets assess probabilities. The decision for a 25 basis point cut in yesterday's meeting aligned with a development that the market had already priced in.

Interest Rate Cut and Its Impact on the Markets

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

The Fed announced it would start purchasing $40 billion in Treasury bonds monthly as of December 12, aiming to alleviate the tightening in short-term funding conditions. This announcement quickly provided relief in the bond market, causing the U.S. 10-year yield to drop to 4.13% and the 2-year yield to fall to 3.52%.

While projections foresee only a single 25 basis point cut for the next year, upward revisions in growth estimates and downward updates in PCE forecasts support risk appetite in the markets. Fed Chairman Powell managed to soften the overly hawkish perception by taking a balanced stance during his press conference.

Developments in the Commodity Market

Significant movements are being observed in the commodity market. Spot gold experienced a slight decline from a one-week high, while silver tested record levels with over 100% gain since the beginning of the year. U.S. futures came under pressure due to Oracle's earnings failing to meet expectations. Particularly, banking stocks were at the center of sales during the day.

Brent crude stabilized around $62 amid tensions between the U.S. and Venezuela. A decline in the dollar index below the 99 level led the euro/dollar exchange rate to rise to 1.17.

Important Developments for Investors

Borsa Istanbul started the previous trading day with a buying sentiment; however, due to increasing cautiousness throughout the day, it was unable to maintain its gains. The BIST 100 closed down 0.40%, at 11,194 points. Today's Central Bank of the Republic of Turkey's (TCMB) interest rate decision continues to be the focal point for the market.

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