Macro and Politics

* The Treasury will hold 2-year & 10-year fixed-coupon bond auctions today and finalize its domestic borrowing program for October. The Treasury tapped the domestic markets to the tune of TL15.5bn via yesterday’s 5-year CPI-indexed bond auction. The real compounded rate was 6.22%, while the bid – to – cover ratio was low at 2.04x. As a result, the total borrowing of the Treasury since the beginning of the month has reached TL138.4bn. According to the three-month (October–December 2025) domestic borrowing strategy, the Treasury plans to borrow a total of TL290.1bn, against redemptions of TL263.6bn in October.

* The current account balance posted a surplus of USD5.5bn in August, broadly in line with our house forecast of USD5.68bn. Accordingly, the 12-month rolling deficit narrowed from USD18.8bn to USD18.3bn, while the cumulative deficit for the Jan – Aug period stood at USD15.8bn. The core balance (excluding gold and energy) posted a solid surplus of USD10bn in August, with the annual surplus edging up from USD47.1bn to USD47.5bn. Preliminary data released by the Ministry of Trade for September indicate a renewed widening in the foreign trade deficit. According to the early figures, exports rose by 3% y/y to USD22.6bn, while imports increased by 8.8% y/y to USD29.5bn. Accordingly, the trade deficit widened to USD7.4bn in September, up from USD4.2bn in August, bringing the 12-month cumulative deficit from USD87.5bn to USD89.8bn. In light of the preliminary data, we estimate the current account balance to record a surplus of USD2.1bn in September. We expect the balance-of-payments-defined trade deficit to widen from USD2.8bn to USD4.4bn, while the services surplus — supported mainly by tourism revenues — likely narrowed from USD9.5bn to USD7.6bn as net income from the travel item declined. Our year-end current account deficit forecast stands at USD22bn (1.5% of GDP), though we see risks skewed to the downside.