Macro and Politics

*The credit rating agency S&P is expected to release Turkey’s sovereign rating review today. Any possible review announcement would likely come late at night Turkish time. It’s important to note that these calendars are only reference points and do not guarantee that the agencies will conduct a review or make a new rating decision. At its previous scheduled review back on October 25, S&P did not issue any update regarding Turkey’s sovereign rating or outlook. For today’s review, we do not expect any change in either the sovereign rating or the current “stable” outlook. It’s worth noting that credit rating agencies Moody’s, S&P and Fitch currently assess Turkey three notches below investment grade, all with a stable outlook.

* The CBT will release the results of the Survey of Market Participants for April @ 10:00 local time. According to the results of the March Survey of Market Participants, respondents revised their year-end 2026 CPI inflation expectation upward to 25.4% from 24.1%, while the 2027 year-end inflation forecast increased slightly to 18.7% from 18.4%. Expectations for CPI inflation 12 months ahead edged up to 22.2% from 22.1%, while the 24-month-ahead forecast rose to 17.3% from 17.1%. Meanwhile, the five-year-ahead annual inflation expectation increased modestly to 11.6% from 11.4%. Despite the recent two-week ceasefire agreement between the United States and Iran helping to contain the deterioration in global risk sentiment, we expect the upward drift in domestic year-end inflation and policy rate expectations to persist.

*TURKSTAT will release March housing sales figures @ 10:00 local time. Housing sales increased by 11.7% m/m and 5.9% y/y in February, reaching 124,549 units. Within total sales, first-hand transactions accounted for 30.3%, while second-hand sales maintained their dominance with a 69.7% share. Mortgage-backed sales stood out in February, rising sharply by 23.6% m/m and 42.3% y/y to 25,035 units. As a result, the share of mortgaged sales in total transactions climbed to 20.1%, while other sales accounted for 79.9%. We assess that the recent decline in mortgage rates has been a key driver of this improvement. Indeed, the average housing loan rate eased to 35.2% in February from 36.2% in January. Considering that these rates stood at 40.5% and 40.0% in January and February of last year, respectively, the relative easing in financing conditions appears to have supported sales. In addition, February data – reflecting the pre US – Iran conflict period – likely benefited from expectations that the anticipated decline in interest rates would feed through to housing prices more rapidly. Meanwhile, housing sales to foreigners declined by 2.9% y/y to 1,506 units in February, with their share in total sales remaining subdued at 1.2%.

* The Residential Property Price Index (RPPI) rose by 2% m/m and 26.4% y/y in March, reaching 219.7, while declining by 3.4% y/y in real terms. Recall that the real annual change in the RPPI had turned positive at 0.2% in November for the first time since January 2024, before reverting back into negative territory as of December. In this respect, the March reading indicates that residential property prices continue to lose value in real terms. Meanwhile, the New Tenant Rent Index (NTRI) increased by 2% m/m and 34.4% y/y to 304.2 in March, posting a real annual gain of 2.7%. This configuration points to an ongoing real erosion in property prices, while upward pressure in the rental segment remains intact. Against this backdrop, we expect rent inertia—one of the key components within inflation dynamics—to persist in the near term, with rent inflation continuing to accompany the headline disinflation process in a more lagged and resilient manner.

* Foreign investors recorded net inflows of USD430.3mn into the equity market and USD712.7mn into the bond market (excluding repo transactions) in the week of April 3 – 10. This marked the first foreign inflow into the bond market following seven consecutive weeks of outflows, while foreigners’ share in the total government bond stock remained unchanged at 5.8% over the same period. In the eurobond market, foreigners were also net buyers, with inflows totaling USD866.7mn during the week. On a rolling one-year basis, cumulative flows indicate a net foreign inflow of USD4.7bn into equities and USD5.5bn into bonds (excluding repo transactions). Year-to-date, foreigners have been net buyers of USD1.5bn in equities, while recording a cumulative outflow of USD1.6bn from the bond market on an ex-repo basis. In the week of April 3 – 10, FX deposits (excluding gold, EUR/USD parity effect adjusted) held by residents declined by USD1.2bn, while their total FX deposits (including gold, price adjusted) posted a net decline of USD987mn. The CBT’s gross FX reserves increased by USD9.3bn to USD171.1bn, while net FX reserves rose by USD9.9bn to USD55.5bn. During the same period, the swap stock declined by USD3.8bn to USD23.4bn, leading to a USD13.7bn increase in net reserves excluding swaps, which reached USD32.1bn.