Macro and Politics
Tacirler Investment
* TURKSTAT will release October Industrial Production (IP) figures today @ 10:00 local time. Foreign trade figures serve as a key leading indicator for our IP forecasts. In October, the monthly increase in imports of intermediate goods (excluding gold and energy) moderated to 4.0%, while the annual rise stood at 4.1%. Another important leading indicator, the Istanbul Chamber of Industry (ICI) Turkey Manufacturing PMI, slipped from 46.7 to 46.5, marking a three-month low and signaling a further loss of momentum in manufacturing activity. Based on these leading signals, we expect the sequential IP to remain in negative territory on a monthly basis in October, while calendar-adjusted IP is likely to post an annual increase of around 3.8%. Please recall that the sequential (the seasonally and calendar adjusted monthly figure) IP contracted by 2.2% m/m, while calendar-adjusted IP increased by 2.9% y/y back in September.
* The Treasury tapped the domestic markets to the tune of TL64.1bn (including non-competitive sales) through yesterday’s 2y and 5y fixed-coupon bond auctions. The 2y auction drew exceptionally strong demand, with a bid-to-cover ratio of 4.04x and an average cost of borrowing of 37.72%. In the 5y auction, the bid-to-cover ratio also stood high at 2.85x, while the average cost of borrowing came in at 34.49%. With yesterday’s double sales, the Treasury’s domestic borrowing for the month has reached TL98bn. Following this week’s auctions, the Treasury is scheduled to complete its December issuance program next Tuesday, 16 December, with a direct sale of a 2y TLREFK-indexed lease certificate and 5y CPI-indexed bond auction. According to the Treasury and Finance Ministry’s three-month domestic borrowing strategy for the December 2025 – February 2026 period, domestic redemptions amounting to TL109.4bn in December will be met with planned borrowing of TL124.2bn, implying a rollover ratio of 114%. Hence, having already raised a total of TL98bn from the domestic markets so far, the Treasury is likely to borrow around TL26bn via next week’s direct sale and bond auction.