Macro and Politics

*The Treasury will hold direct sales of a 1.5-year gold-denominated bond and a1.5-year gold-denominated lease certificate today and finalize its domestic borrowing program for May. According to the domestic borrowing strategy for the three-month period covering May – July 2026, the Treasury plans to conduct TL381.7bn in domestic borrowing against TL347bn in redemptions in May, implying a rollover ratio of 110%. Having already raised TL212.6bn since the beginning of the month, the Treasury is expected to borrow approximately TL169bn through the direct sales scheduled for May 18.

* TURKSTAT will release May Consumer Confidence Index @ 10:00 local time. The consumer confidence index posted a modest increase in April, rising to 85.5 from 85. The index ranges between 0 and 200, with readings above 100 indicating optimism and those below 100 pointing to a pessimistic outlook among consumers. A breakdown of the April data reveals a mixed picture across subcomponents. The index tracking households’ current financial conditions declined to 71.8 from 72.8, while expectations for households’ financial situation over the next 12 months improved, with the respective sub-index increasing to 87.5 from 85.6. Meanwhile, expectations regarding the general economic outlook over the next 12 months edged down to 78.3 from 79.1. In contrast, the index measuring intentions to spend on durable goods, which is an important proxy for domestic demand, rose to 104.4 from 102.7. Overall, the data suggest that, rather than signaling a broad-based improvement in consumer confidence, the uptick in April reflects a partial recovery in expectations alongside a continued weakness in current conditions. Despite a relative easing in geopolitical risks, we do not yet observe a sustained improvement in consumer sentiment.

* April Employment figures will be released @ 10:00 local time. The seasonally adjusted unemployment rate declined from 8.4% to 8.1% in March, while the broader underutilization measure that we closely monitor – the composite rate of labor underutilization comprising time-related underemployment, the potential labor force, and unemployment – rose markedly from 29.9% to 31.5%, reaching its highest level since June 2025. A breakdown of the components indicates that the combined rate of time-related underemployment and unemployment increased from 19.2% to 21%, while the combined rate of unemployment and the potential labor force edged down slightly from 20.5% to 20.4%. The rise in the broad underutilization measure to 31.5%, with levels hovering around 30%, points to a materially weaker labor market than implied by the headline unemployment rate. Given the expected drag on economic activity stemming from US – Iran tensions, we anticipate that the upward trend in broader labor market slack will persist in the period ahead.