What 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 Federal Reserve's guidance. The inflation rate hovering around 3%, the possibility of real interest rates approaching low levels in the new administration, and the continued potential for fiscal expansion have strengthened the perception that the Fed might take a more limited easing step than expected.

The recently released dot plot suggests that only a limited interest rate cut for 2026 is seen as a reasonable scenario, reflecting how markets evaluate probabilities. The 25 basis point cut decision made in yesterday's meeting was in line 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 9 votes in favor and 3 against, while Miran's view for a 50 basis point cut drew attention. Conversely, Goolsbee and Schmid preferred to keep rates unchanged, highlighting the discord within the committee.

To alleviate tight conditions in short-term funding, the Fed announced that it will begin monthly purchases of $40 billion in Treasury bonds starting December 12. This announcement provided quick 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 for the upcoming year suggest only a single 25 basis point cut, upward revisions in growth forecasts and downward updates in PCE predictions support risk appetite in the markets. Fed Chair Powell managed to soften the overly hawkish perception by exhibiting a balanced stance during his press conference.

Developments in the Commodity Market

Significant movements are being observed in the commodity market. Spot gold dipped slightly from a one-week high, while silver tested record levels with a premium of over 100% since the beginning of the year. U.S. futures faced pressure due to Oracle's earnings not meeting expectations. Banking stocks, in particular, were at the center of selling throughout the day.

Brent oil 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 parity to rise to 1.17.

Important Developments for Investors

Borsa Istanbul began the previous trading day with a buying trend; however, due to a cautious stance throughout the day, it could not maintain its gains. The BIST 100 closed down 0.40% at 11,194 points. Today's decision by the Central Bank of the Republic of Turkey (CBRT) regarding interest rates remains the focal point for the market.

The new day is expected to be a week of increased volatility, and the interest rate decision from the CBRT is anticipated to resonate in the markets. Additionally, geopolitical issues and domestic political developments may also influence pricing.