Yesterday was a disappointing day for TRY investors carrying long positions. On a day, when Moody’s stated base case for Turkey is keeping investment grade rating, TRY-denominated assets could not rally. Moody’s commentary could not even sustain a 5-minute short-covering rally in BIST. BIST closed the day flat, TRY basket and yields were higher.
· Rising geopolitical risks (kidnappings in Baghdad + PKK terrorism), Koza Ipek Holding investigations and overall EM weakness may be perceived as the main reasons.
· Turkey’s risk premium, 5-year CDS rose 8.1% in 2 trading days = worst performance in EM.
· This morning, we expect a slightly higher opening for BIST equities just based on S&P500 close from last night. TRY basket is trading @ 5-day highs at 3.13 and traded above 3.14 yesterday despite positive Moody’s commentary.
· August CPI print will be released at 8:00am London time – consensus = 0.11%. Expect tight range trading until U.S August NFP tomorrow.
· BIST100 short-term technicals:
- TRY : Support = 72.8k / 72.0k ; Resistance : 74.5k / 75.3k ; Last trade : 73.7k
- USD : Support = $24.8k / $24.5k ; Resistance : $25.2k (10-dma) / $25.9k ; Last trade : $25.0k