Daily Bulletin

Good morning. The rise in U.S. Treasury yields continues. The 10-year U.S. Treasury yield has risen by nearly 100 basis points over the past 3–6 months, moving from around 4.30% to close to 5.30%, and we should note that other U.S. Treasury yields with maturities from 1 to 7 years have seen similar increases of around 100 basis points. This situation, which implies a significant increase in the cost of holding investments in risky assets, is creating mounting pressure on assets such as equities and precious metals. U.S. futures and Asian equities are in negative territory this morning, while European futures are flat. Bank of America’s view that it sees no risk for equity markets until U.S. Treasury yields reach 7% stands out. This expectation, which is based on an estimated price/earnings ratio of 16x, remains relatively overly optimistic compared with the consensus ratio of 19x. Domestically, as the fund investigations and liquidation process continue, pressure on Borsa Istanbul persists, combined with weakness abroad. The BIST 100 index fell 2.4% yesterday to 12,592 points, with BIMAS, MGROS, GRTHO, HALKB and KRDMD contributing positively to the index, while ASTOR, TUPRS, ASELS, DSTKF and SASA weighed on it. The companies that stood out with steady fund inflows over the past week were BIMAS, TCELL, ENKAI, VAKBN, BAHKM and TTRAK. We believe it will be more meaningful to assess the index from a technical perspective after the 27 constituent changes take effect on October 1. For now, however, the 12,400 and 12,000 levels can be monitored as support, while the 12,750 and 13,000 levels stand out as resistance. On today’s agenda, confidence indices in Turkey and Europe, as well as house prices and consumer confidence data in the U.S., stand out. Turkey’s 5-year CDS premiums are starting the day at 252 basis points.