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

Things You Should Know Before Market Open (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 in the new administration and the need for fiscal expansion remaining alive has strengthened the perception that the Fed may take a more limited easing step than expected.

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

Interest Rate Cut and Its 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 a division within the committee.

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

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

Developments in the Commodity Market

Significant movements are being observed in the commodity market. Spot gold slightly retreated from a one-week high, while silver tested record levels with an over 100% premium since the beginning of the year. U.S. futures came under pressure due to Oracle's earnings falling short of expectations, particularly bank stocks were the center of selling during the day.

Brent crude stabilized around $62 amid tensions between the U.S. and Venezuela. The dollar index easing below the 99 level caused the euro/dollar parity to rise to 1.17.

Important Developments for Investors

Borsa Istanbul started the previous trading day positively; however, due to the increasing cautious stance throughout the day, it could not maintain its gains. 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 anticipated to be a week with increased volatility, and it is expected that the interest rate decision made by the Central Bank will resonate in the markets. Additionally, geopolitical issues and domestic political developments may impact valuations.