Stock Futures Dip as Investors Await Key Payrolls Data 
China's Refining Industry Faces Major Shakeup Amid Challenges 
RBA Raises Interest Rates by 25 Basis Points as Inflation Pressures Persist 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
Gold Prices Fall Amid Rate Jitters; Copper Steady as China Stimulus Eyed 
Bank of Canada Holds Interest Rate at 2.25% Amid Trade and Global Uncertainty 
MAS Holds Monetary Policy Steady as Strong Growth Raises Inflation Risks 
ECB’s Cipollone Backs Digital Euro as Europe Pushes for Payment System Independence 
BOJ Policymakers Warn Weak Yen Could Fuel Inflation Risks and Delay Rate Action 
Fed May Resume Rate Hikes: BofA Analysts Outline Key Scenarios 
Moody's Upgrades Argentina's Credit Rating Amid Economic Reforms 
South Africa Eyes ECB Repo Lines as Inflation Eases and Rate Cuts Loom 
Lithium Market Poised for Recovery Amid Supply Cuts and Rising Demand 
Bank of England Expected to Hold Interest Rates at 3.75% as Inflation Remains Elevated 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
RBA Expected to Raise Interest Rates by 25 Basis Points in February, ANZ Forecast Says 
The Turkish lira (TRY) surged after Erdogan claimed triumph in the weekend’s Turkish presidential election. After much ado about how AKP’s and Erdogan’s ratings had begun to falter ahead of the election, the incumbents performed much better than polls had indicated and the opposition alliance bit the dust. Erdogan won the presidency in the first round itself (with 52.5% of the vote) and the AKP-MHP alliance achieved a wide 57% majority of the parliament.
While this outcome is positive for producing a relatively stable government, the risks to the central bank and monetary policy, and hence, the lira outlook have multiplied. Our FX Hotspot from earlier today recaps the main points.
While we hold off moving UW with the CBRT surprising once again. The aggressive 500bps of tightening cumulatively delivered since April 25th is supportive for the currency in the first instance, however, we see a portion of it as merely “catching up”, with inflation accelerating.
Contemplating above driving factors, on hedging grounds we initiate RV trade - 3m USDTRY put up-and-in Short USDTRY.
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