Marketmind: Inflation Fears But Turkey Likely Still In Rate Cut Mode | Invest News

(Reuters) – A look at the day ahead from Sujata Rao.

These inflationary fears simply will not go away.

European gas prices have resumed their ascent and are up 60% so far in November, while data on Wednesday showed a US residential construction sector in the throes of labor and labor shortages. equipment. And companies continue to warn of higher costs that could affect margins.

All this on top of last week’s anti-forecast inflation data from the United States, Britain and Canada, among others.

Uncertainty over the impact this could have on economic growth and expectations of earlier-than-expected interest rate hikes are limiting equity gains, keeping global stocks and the S&P 500 flat for the week. It also keeps demand for government bonds going, after Treasury yields fell on Wednesday.

Concerned governments are pondering relief – China has said it will release oil from reserves, following a US proposal for a coordinated release of stocks by major oil-consuming nations.

The news caused oil prices to drop by $ 1.

Emerging markets have had a scorching spell this year, with most forced to raise interest rates to control inflation and preserve their yield premiums relative to developed markets. Average government borrowing costs have climbed 160 basis points this year, according to a JPMorgan index

South Africa could join the rate hike brigade on Thursday; despite moderate inflation, it may find interest in striking early.

But there are exceptions. Economists expect Turkey to cut rates 100 basis points to 15%, about five percentage points below inflation. The lira has lost about 30% against the dollar this year – now at 11 to the dollar, it was 6.9 in March

Will central bank governor Sahap Kavcioglu respect President Tayyip Erdogan’s line and cut rates? Standing tall to protect the pound against further losses may well see it become the fourth 2021- 10-08 governor to lose his job the last two years and a bit. Timeline of the read,

Key developments that should provide more direction to the markets on Thursday:

-Japan’s new stimulus package to include record spending of around $ 488 billion

-Carlyle says buyout talks with Metro Bank over

-Profit of Thyssenkrupp to double in 2022, announces hydrogen IPO

-German car registrations

-Fed Speakers: Chicago President Charles Evans

– Emerging markets: central banks meet in South Africa, Turkey, Indonesia, Philippines

-Results Europe: Royal Mail, National Grid, ThyssenKrup

-American results: Macy’s Alibaba, Kohl’s

(Reporting by Sujata Rao; editing by Karin Strohecker)

Copyright 2021 Thomson Reuters.

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