Macro and Politics

* The Treasury will hold direct sales of 1-year gold-denominated bonds and lease certificates today, finalizing its domestic borrowing program for May. According to three-month (May – July 2025) domestic borrowing program, the Treasury has a domestic redemption of TL160.7bn in May, while in return it plans to borrow TL187.5bn in total throughout the month via four auctions and two direct sales. Having already raised a total of TL102.1bn through domestic borrowing since the beginning of the month, the Treasury is expected to borrow around TL85bn via today's double direct sales.

* The CBT will release March short-term external debt stock figures @ 10:00 local time. The short-term external debt stock in February materialized at USD173.2bn, down by 1.3% m/m. In terms of short-term debt statistics, we believe that “debt stock on a remaining maturity basis,” calculated based on the external debt maturing within 1 year or less regarding the original maturity, is rather critical, which is at USD223.6bn as of February 2025. Of this total, USD19.2bn is attributed to loans taken by resident banks and private sector affiliates from their branches and affiliates abroad. Stripping this amount from the total results in USD204.4bn. We also add 12-month forward-looking CAD expectations on this amount so as to reach Turkey’s annual external financing need (EFN).  Accordingly, we calculate EFN as of February 2025 around USD230bn.

* The CBT will release the Residential Property Price Index for April @ 10:00 local time. The Residential Property Price Index (RPPI) rose by 2.0% m/m and 32.3% y/y in March, reaching a level of 174. However, in real terms, the index posted an annual decline of 4.2%. While the persistent real depreciation in house prices has continued since February 2024, the magnitude of the decline has shown signs of moderation since October. The y/y increase in mortgaged home sales appears to have been driven by expectations of further price appreciation, despite mortgage rates remaining elevated at around 40%. These expectations are likely supported by the recent stabilization in real house price depreciation, following an extended period of real-term weakening. This trend in both mortgage-backed sales and house prices continued in the March data. That said, in light of the heightened market volatility and rising political uncertainty observed since March 19, alongside the Central Bank of Turkey’s rate hike, we anticipate that the recent moderation in real price declines and the upward trend in mortgaged sales may begin to lose traction as of April.

*TURKSTAT will release May Consumer Confidence Index @ 10:00 local time. The consumer confidence index declined by 2.3% from 85.9 to 83.9 level in April. Please recall that the index climbed from 82.1 to 85.9 level back in March, rising to its highest level since May 2023. However, recent domestic developments since March 19 and increased market volatility have begun to impact leading indicators as of April. As per the sub-categories of the April data: The index related to the financial situation of households at present decreased from 70.9 to 69.1, while the general economic situation expectation index over the next 12-month period decreased by 2.2% to 82.8. Moreover, the financial situation expectations of households over the next 12-month index retreated by 0.5% to 84.3, while the sub-index related to the assessment on spending money on durable goods over the next 12 months compared to the past 12-month period, which is an important leading indicator in terms of domestic demand, slid 3.8% m/m to 99.3.