Macro and Politics

* TURKSTAT will release June Industrial Production (IP) figures today @ 10:00 local time. Recall that the sequential (the seasonally and calendar adjusted monthly figure) industrial production (IP) increased by 3.1% m/m in May, while the calendar adjusted IP rose by 4.9% y/y. The 3.1% m/m increase in May was largely driven by the low base of the previous month and the contribution from highly volatile sectors. The persisting fluctuations in capital goods remain the main factor behind the sharp up and downs observed in the monthly data. Therefore, while we do not expect this increase to be sustained, we observe that the underlying trend in real sector activity remains weak. Scrutinizing the leading indicators for June: foreign trade data show that imports of intermediate goods excluding gold and energy fell by 11% m/m, while rising by 13.1% y/y. Moreover, the Istanbul Chamber of Industry Turkey Manufacturing PMI declined to 46.7 in June from 47.2 in the previous month, marking its lowest reading since October 2024. In line with these early signals, we expect seasonally adjusted monthly industrial production to return to contraction territory in June, while calendar-adjusted industrial production is likely to remain in positive territory on an annual basis.

* The Treasury will hold a 2y fixed coupon bond auction today. According to its three-month (August – October 2025) domestic borrowing program, the Treasury faces a hefty domestic redemption of TL339bn in August, while in return it plans to borrow TL440.8bn in total throughout the month, indicating a roll-over ratio of 130%. After today’s single auction, the Treasury will hold 10m G-bond and the direct sale of 2y lease certificate tomorrow, 7y FRN auction on August 18, 4y TLREF & 5Y fixed coupon bond auctions on August 19 and the direct sales of 1y USD-denominated bond & 1y USD-denominated lease certificate on August 21 and finalize its domestic borrowing program for August.