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

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

Recently, the most significant factor influencing global markets has been the Fed's guidance. The inflation hovering around 3%, the possibility of real interest rates approaching low levels in the new administration, and the likelihood of continued fiscal expansion have strengthened the perception that the Fed may take a more limited easing step than expected.

The announced dot plot, which considers only a limited interest rate cut for 2026 as a reasonable scenario, shows how the markets are evaluating probabilities. The decision for a 25 basis point cut yesterday was in line with a development that the market had already priced in.

Interest Rate Cut and Its Effects on the 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 to keep rates unchanged, highlighting the divergence within the committee.

The Fed announced that starting December 12, it would begin purchasing $40 billion in Treasury bonds monthly to reduce the tightness in short-term funding conditions. This announcement quickly provided relief in the bond market, with the U.S. 10-year yield dropping to 4.13% and the 2-year yield declining to 3.52%.

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

Developments in the Commodity Market

Significant movements are being observed in the commodity market. Spot gold slightly retreated from a week-high, while silver tested record levels with a return of over 100% since the beginning of the year. U.S. futures came under pressure due to Oracle's earnings failing to meet expectations. In particular, 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 decline of the dollar index below the 99 level caused the euro/dollar exchange rate to rise to 1.17.

Important Developments for Investors

Despite starting the previous trading day positively, Borsa Istanbul could not maintain its gains throughout the day due to increasing cautious sentiment. The BIST 100 index closed down 0.40% at 11,194 points. Today's Central Bank of Turkey's interest rate decision remains the focal point of the market.

The new day is expected to be a week of increased volatility, and the interest rate decision by the Central Bank of Turkey is anticipated to resonate through the markets. Additionally, geopolitical issues and domestic political developments may affect pricing.