Macro and Politics

* TURKSTAT will release July house sales figures @ 10:00 local time. Housing sales rose to 107,723 units in June, marking a robust 35.8% increase on an annual basis, while contracting by 17.2% compared to the previous month. Mortgage-backed sales recorded a particularly sharp annual gain of 112.6% during the period, reaching 14,484 units, though monthly sales declined by 25.4%. Turning to mortgage interest rate dynamics, the average mortgage rate stood at 44.5% in June 2024 and eased only marginally to 43.5% in June 2025, signaling a rather limited year-on-year decline. 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 decline. The June data suggest that both the momentum in mortgage-financed sales and the underlying price dynamics persisted during the month.

* The current account posted a deficit of USD2bn in June, higher compared to both our house forecast and the market median estimate at USD1.5bn deficit. As a result, the 12-month rolling current account deficit widened from USD16.1bn to USD18.9bn. The core balance, which excludes gold and energy, registered a deficit of USD2.6bn during the month, while the annual surplus narrowed from USD49.5bn to USD47.1bn. Looking ahead, we expect the current account to revert to surplus in July. We forecast that the balance of payments–defined foreign trade deficit will narrow from USD6.5bn to USD4bn, while the services surplus — driven primarily by higher net tourism revenues — will reach USD7.7bn. Consequently, we project the current account to record an approximate surplus of USD2bn in July. Our year-end 2025 current account deficit forecast stands at USD 22bn (1.5% of GDP).

* The Treasury tapped the domestic markets to the tune of TL41.7bn (including non-competitive sales) via yesterday’s 10m TL G-bond bond auction, while also sold TL13.9bn at the direct sale of 2y lease certificate. Accordingly, the total domestic borrowing for the month reached TL136.1bn. 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 this week’s auctions and direct sale, the Treasury will hold a 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.