Macro and Politics

*The Treasury will hold 5y CPI-linker and 10y fixed coupon bond auctions today and finalize its domestic borrowing program for the month. The new 10-year bond maturing September 5, 2035 will become the benchmark issue following today’s auction, replacing the current 27.09.2034 maturity in the secondary market. According to its three-month (Sept – Nov 2025) domestic borrowing program, the Treasury faces a domestic redemption of TL255.8bn in September, while in return it plans to borrow TL346n in total throughout the month, indicating a roll-over ratio of 135%. As per the Treasury’s domestic borrowing program, the two auctions scheduled for today are expected to raise approximately TL99bn in funding.

* The CBT will release the Residential Property Price Index (RPPI) for August @ 10:00 local time. The RPPI rose by 0.9% m/m and 32.8% y/y in July, reaching a level of 187.7. Yet, in real terms, the index posted an annual decline of 0.5%. Although the annual real depreciation in housing prices has persisted uninterruptedly since February 2024, the pace of this depreciation has been moderating since October. Notably, the 0.5% year-on-year decline recorded in July marks the smallest real loss in value observed since February 2024. We believe that the recent annual increase in mortgaged home sales, despite mortgage rates remaining elevated above 40%, was partly driven by expectations of future price hikes, as real house prices—having been in decline for some time—have recently shown signs of stabilization. Looking ahead, we expect the annual change in real house prices to turn positive in the near term.

* TURKSTAT will release August house sales figures @ 10:00 local time. Housing sales rose to 142,858 units in July, marking a robust 32.6% increase on an annual basis and 12.4% rise m/m. Mortgage-backed sales recorded an annual gain of 60.3% and a monthly rise of 27.2% during this period, reaching 18,425 units. Turning to mortgage interest rate dynamics, the average mortgage rate stood at 44.1% in July 2024 and eased only marginally to 42.6% in July 2025, signaling a rather limited annual 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 above 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. Turning to the breakdown of housing sales data, a total of 1,913 units were sold to foreigners in July, marking an 18.6% y/y decline. In the same month, sales to foreign buyers accounted for 1.3% of total housing transactions.

* The central government budget posted a surplus of TL96.7bn in August, while the primary balance recorded a surplus of TL276.4bn. In the same period last year, the budget recorded a deficit of TL129.6bn and a primary deficit of TL32.5bn in the same month of last year. On a 12-month rolling basis, the budget deficit narrowed from TL2.3tn to TL2tn, while the primary deficit contracted from TL417bn to TL108bn. In the Jan – Aug period, the budget deficit reached TL907.6bn, corresponding to 47% of our 2025 full-year deficit forecast, whereas the primary balance registered a surplus of TL518.1bn. Please note that we have recently revised our year-end 2025 budget deficit forecast upward from TL1.9tn (3.1% of GDP) to TL2.3tn (3.7% of GDP). Recall that the Medium-Term Economic Program (MTEP) for 2026–2028, released last week, revised the 2025 budget deficit-to-GDP ratio from 3.1% to 3.6%, while the ratio for 2026 was adjusted from 2.8% to 3.5%.

* The Ankara 42^nd Civil Court of First Instance yesterday adjourned a lawsuit seeking the annulment of the main opposition CHP’s congresses, postponing the hearing until Oct. 24, 2025. The case contests the party’s 38^th Ordinary Congress of November 4–5, 2023, as well as its 21^st Extraordinary Congress held on April 6, 2025. Following arguments, the court dismissed the plaintiffs’ motions for interim measures, ruling that such requests had already been considered.