Daily Bulletin

Good morning. While concerns that the U.S. may intervene in Iran over the weekend are being priced in, a statement from the White House suggesting that “a decision on military intervention against Iran will be made within two weeks” is providing some relief to global equity markets. These remarks may be tactical in nature and should not be interpreted as a guarantee of non-aggression for two weeks; nevertheless, they are offering some breathing space. Meanwhile, the Iran–Israel tension and missile attacks continue. On another front, the Central Bank of the Republic of Turkey (CBRT) announced its Monetary Policy Committee (MPC) rate decision yesterday. As expected, the policy rate (one-week repo) was held steady at 46%. However, the upper bound of the interest rate corridor (overnight lending rate) was also kept unchanged at 49%, whereas we had expected a 150 basis points cut to 47.5%. The MPC Statement emphasized geopolitical risks and rising global trade protectionism. Although the rate decision was more hawkish than anticipated, the overall tone of the statement conveys only a very limited dovish stance. While we continue to expect a rate cut at the next MPC meeting scheduled for July 24, geopolitical risks and the trajectory of energy prices will remain key factors to monitor. On BIST, due to the limited easing in geopolitical tensions, we may observe an attempt to hold above the 9000 / 9100 range this morning and a possible move toward the 9200 / 9250 resistance zone. However, the impact of the MPC decision will likely act as a limiting factor. Turkey’s 5-year CDS premiums are starting the day at 312 basis points.