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 affecting global markets has been the Fed's guidance. With inflation hovering around 3%, there is a perception that real interest rates may approach low levels in the new administration period, and the likelihood of fiscal expansion remains alive, strengthening the notion that the Fed might take a more limited easing step than expected.

The dot plot revealed that only a limited interest rate cut for 2026 is seen as a reasonable scenario, indicating how the markets assess possibilities. Yesterday's decision for a 25 basis point cut came in line with a development already priced in by the market.

Interest Rate Cut and Its Impact on the Markets

The Fed's decision passed with a vote of 9 to 3, while Miran's view towards a 50 basis point cut drew attention. In contrast, Goolsbee and Schmid expressed their preferences for keeping the rate unchanged, highlighting the divergence within the committee.

The Fed announced it will begin purchasing $40 billion worth of Treasury bonds monthly starting December 12 to ease the tightening of short-term funding conditions. This announcement provided rapid relief in the bond market, pushing the U.S. 10-year yield down to 4.13% and the two-year yield to 3.52%.

Projections only foresee a single 25 basis point cut for the upcoming year, yet 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 taking a balanced stance during his press conference.

Developments in the Commodity Market

Significant movements are observed in the commodity market. While spot gold slightly retreated from a week-high, silver tested record levels with more than 100% premium since the beginning of the year. U.S. futures were under pressure due to Oracle's earnings missing expectations. Particularly, bank stocks were at the center of selling during the day.

Brent oil stabilized around $62 amid tension between the U.S. and Venezuela. The weakening of the dollar index below 99 also led to the euro/dollar exchange rate rising to 1.17.

Important Developments for Investors

Borsa Istanbul started the previous trading day with a buying momentum; 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 interest rate decision by the Central Bank of the Republic of Turkey (CBRT) to be made today continues to be the focal point of the market.

The new day is expected to be one with increased volatility, and the market is anticipated to react following the CBRT's interest rate decision. Additionally, geopolitical issues and domestic political developments may influence pricing.