Macro and Politics

* The Treasury will hold 4y TLREF-indexed and 5y fixed coupon bond auctions today. According to the Treasury’s domestic borrowing strategy for the February–April 2026 period, the Treasury projects domestic borrowing of TL525.3bn against redemptions totaling TL656.6bn in February. The program also points to a similar stance in March and April, with planned borrowing remaining below redemption amounts. Following today’s double auctions, the Treasury will hold an 11-month T-bill auction and a 5-year lease certificate direct sale on 10 February, followed by 2-year fixed-coupon and CPI-indexed bond auctions on 16 February, and direct sales of a 1.5-year gold bond and a gold-backed lease certificate on 17 February.

* The Treasury cash balance posted a deficit of TL246.2bn in January, while the primary balance recorded a surplus of TL207.5bn. The January Treasury cash balance figures serve as a leading indicator for the central government budget data scheduled for release on Monday, 16 February. Accordingly, we estimate the central government budget balance to post a deficit of around TL165bn in January. Our house forecast puts the 2026 budget deficit at TL2.8tn (3.4% of GDP), with risks skewed to the downside. The current picture points to temporary improvements in expenditure composition rather than a structural tightening in the fiscal stance. That said, the trajectory of current and capital expenditures will remain key risk areas in assessing the durability of fiscal discipline going forward.