China's Refining Industry Faces Major Shakeup Amid Challenges 
Oil Prices Dip Slightly Amid Focus on Russian Sanctions and U.S. Inflation Data 
Energy Sector Outlook 2025: AI's Role and Market Dynamics 
Trump’s "Shock and Awe" Agenda: Executive Orders from Day One 
Urban studies: Doing research when every city is different 
What does China’s host bid mean for the High Seas Treaty? 
US Gas Market Poised for Supercycle: Bernstein Analysts 
Time to buy local: war fuel price shocks reveal the folly of a long food supply chain 
Is dark chocolate healthier than milk chocolate? 2 dietitians explain 
UBS Predicts Potential Fed Rate Cut Amid Strong US Economic Data 
China’s Growth Faces Structural Challenges Amid Doubts Over Data 
Will a new border deal with the US open a backdoor into Kiwis’ personal data? 
European Stocks Rally on Chinese Growth and Mining Merger Speculation 
U.S. Treasury Yields Expected to Decline Amid Cooling Economic Pressures 
UBS Projects Mixed Market Outlook for 2025 Amid Trump Policy Uncertainty 
In Turkey, the CBRT disappointed consensus and market expectations of 100bp of hikes to the late liquidity window (to 13.25%) by hiking only 50bp to 12.75%. The 50bps rate hike is not sufficed to stabilize the currency, as per our stance.
The Central Bank of Turkey held its benchmark one-week repo rate at 8 pct and raised its late liquidity window rate by a less-than-expected 50bps to 12.75 pct on December 14th, in an attempt to curb rising inflation amid strong economic growth. Annual inflation rate hit a 14-year peak of 12.98 pct last month, way above the central bank's target of 5 pct, and core inflation hit a near record high of 12.08 pct.
Following consecutive inflation misses, inflation inertia is high with 24-month ahead inflation expectations rising further to 8.6 pct in December from 8.3 pct in November. The current account deficit is running at 6.8 pct of GDP in 3-month momentum measures, with financing likely to be more difficult going forward.
Over the past 12 months, $21bn of the $42bn current account deficit was financed by portfolio flows. Such strong portfolio inflows will be very hard to repeat without a more credible monetary policy backdrop.
Additionally, support from local FX selling has now also waned. After selling $10bn of FX between the end of September and end of October, locals have now switched to FX buying adding $5.5bn to holdings since early November.
As such the 50bps hike, which still keeps real policy rate negative vs. headline inflation at 13% yoy, is clearly insufficient. It is projected that the further sharp FX weakness to force the central bank into a more credible tightening. While we remain UW FX and hold an outright USDTRY ATM +0.51 delta call (spot reference: 3.7402) of 3m tenors. You hold this derivative contract on both hedging as well as trading grounds, please observe payoff structure that flies exponentially as the underlying spot FX keeps spiking northwards.
FxWirePro launches Absolute Return Managed Program. For more details, visit:
