Turkish central bank cuts rates

The Turkish central bank cut policy rates by 150bps, taking the one-week repo rate to 38%. The December cut was the fourth in a row from the central bank and takes policy to its lowest level since Q4 2023. The bank noted the lower-than-expected November inflation print in its statement accompanying the cut and that the trend of inflation has “declined slightly” for the past two months. Demand conditions also “support the disinflation process” according to the central bank.

The UAE and the European Union have begun negotiations on a “strategic partnership agreement” according to press reports. The agreement will focus on cooperation in digitalization, AI and renewable energy.

The Federal Reserve has reappointed the presidents of all the regional Fed banks to five year terms. Regional Fed presidents serve five year terms with the current one set to end in February 2026.The renewal of terms for the existing regional Fed presidents will minimize one Fed leadership risk for next year though it still remains uncertain who will replace Fed chair Jerome Powell when his tenure as the Fed’s leader ends in May.

Initial jobless claims in the US rose to 236k in the week ending December 6, a sharp reversal on the prior week. However, the claims data may have been distorted by the occurrence of the US Thanksgiving holiday at the end of November. Continuing claims for the prior week dropped to 1.84m.

The Swiss National Bank kept rates unchanged a 0% with the central bank noting that inflation has been “lower than expected.” According to SNB President Martin Schlegel, the monetary policy stance is to ensure that “inflation is likely to rise slowly” over the next year. Schlegel did push back against the need for Switzerland to return to a negative rate policy but said that they would be “willing to implement it” if needed.

Today’s Economic Data and Events

11:00 TU Current account balance Oct: forecast USD 0.2bn

11:00 UK industrial production y/y Oct: forecast 1%

14:30 IN CPI y/y Nov: forecast 0.7%

Fixed Income

US Treasuries were a little lower overnight with the 2yr UST yield up 2bps to 3.5404% and the 10yr yield up less than 1bps at 4.1566%.

Regional credit was positive more or less across the board with gains across sectors and geographies.

FX

The US dollar extended its post Fed slump overnight with the DXY index lower by 0.5%. EURUSD extended gains by 0.4% to 1.1738 while the Japanese yen pulled stronger by about 0.3% to 155.59. Sterling was more or less flat. CHF rallied by about 0.6% to take USDCHF down to 0.7954 after the SNB held policy unchanged.

In emerging markets, INR was in focus again with a rise of 0.5% to 90.3675 while Turkish lira showed minimal reaction to the cut from the TCMB, holding more or less unchanged at 42.60. EGP was stronger by about 0.2% at 47.528.

Equities

In the US the Dow Jones added 1.3% along with gains in the S&P 500 of about 0.2%. Nerves around data centre spending has weighed on technology companies with the NASDAQ down 0.3% overnight. European markets had a positive session with a gain of 0.8% in the Euro Stoxx and 0.5% in the FTSE 100.

In local markets the DFM rallied 0.4% while the ADX 15 posted a similar gain. The Tadawul ended the week with a drop of about 0.1%.

Commodities

The IEA revised its oil demand growth forecast for 2026 higher by 90k b/d to 0.86m b/d thanks to what it described as an “improving macroeconomic outlook.” Demand growth will still be entirely dependent on emerging economies with consumption set to decline in OECD markets. Even with the marginally better outlook for demand conditions, oil markets will still record a record surplus of more than 4m b/d on average next year. OPEC’s own projections were for balanced markets in 2026.

Oil prices were lower overnight with Brent futures down 1.5% at USD 61.28/b while WTI was lower by 1.5% to USD 57.60/b.

Precious metals were stronger overnight with silver still leading the charge with a 2.8% rise. Gold prices were up 1.2% on the day. In industrial metals aluminium and copper were both higher while iron ore slipped back.