Macro and politics

* The Treasury will hold 4y TLREF indexed and 5y fixed coupon bond auctions today. The Treasury tapped the domestic markets to the tune of TL49.3bn (including non-competitive sales) via yesterday’s 2y fixed coupon bond auction. According to three-month (Jan – Mar 25) domestic borrowing strategy, the Treasury has a total domestic redemption of TL225.4bn in January, while in return plans to borrow TL293.8bn throughout the month, indicating a roll-over ratio of 130%, via six auctions and two direct sales. After this week’s auctions, the Treasury will hold 6m G-bond auction on January 20th, 3y CPI-indexed and 6y FRN auctions and January 21st and the direct sales of 1y gold-denominated bond & 1y gold-denominated lease certificate on January 24th and finalize its domestic borrowing program for January.

* The CBRT announced the November balance of payments statistics, revealing a USD2.9bn current account deficit, slightly in line with our house estimate at USD3bn of deficit. Accordingly, the annual current account deficit increased merely to USD7.4bn from USD7.1bn. Furthermore, the core balance (Current Account Balance excluding energy and gold) reported a monthly surplus of USD3.4bn, while annual surplus rose to USD54.4bn from USD53.2bn. We expect the current balance to register a deficit around USD3.5bn in December, with the annual deficit to end 2024 around USD9bn (0.7% of GDP). Our year-end current account deficit expectation for 2025 is USD15bn (1% of GDP). Our forecasts are based on the assumptions of no disruptions in energy prices and the continuation of low levels of gold imports.