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

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

Recently, the most influential factor in global markets has been the Fed's guidance. The inflation remaining around 3%, the possibility of real interest rates approaching low levels in the new administration period, and the potential for fiscal expansion have strengthened the perception that the Fed may take a more limited easing step than anticipated.

The announced dot plot, which sees only a limited interest rate cut as a reasonable scenario for 2026, demonstrates how markets are assessing possibilities. The decision for a 25 basis points cut at yesterday's meeting aligned with a development that the market had already priced in.

Interest Rate Cut and Its Effect on Markets

The Fed’s decision passed with a vote of 9 to 3, with Miran’s suggestion for a 50 basis points cut attracting attention. In contrast, Goolsbee and Schmid expressed their preference to keep rates unchanged, highlighting the divisions within the committee.

To alleviate the tightening in short-term funding conditions, the Fed announced that it would begin purchasing $40 billion worth of Treasury bonds monthly starting December 12. This announcement provided quick relief in the bond market, with the US 10-year yield falling to 4.13% and the two-year yield dropping to 3.52%.

Projections foresee only a single 25 basis points cut for next year, yet upward revisions in growth estimates and downward adjustments in PCE forecasts are supporting risk appetite in the markets. Fed Chairman Powell managed to soften the overly hawkish sentiment by maintaining a balanced stance during the press conference.

Developments in the Commodity Market

Significant movements are being observed in the commodity market. Spot gold saw a slight decline from a one-week high, while silver tested record levels with a premium of over 100% year-to-date. US futures were under pressure due to Oracle's earnings falling short of expectations. In particular, banking stocks were at the center of sales throughout the day.

Brent crude stabilized around $62 amid tensions between the US and Venezuela. The decline of the dollar index below 99 also caused the euro/dollar pair to rise to 1.17.

Important Developments for Investors

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

The new day is expected to be a week of rising volatility, as the TCMB's interest rate decision could resonate in the markets. Additionally, geopolitical issues and internal political developments may also impact pricing.