Turkey's trade deficit widens in July

Turkey’s trade deficit widened to USD 7.29bn in July from a USD 5.89bn deficit recorded in June. While the latest print showed a larger than expected monthly deterioration in the trade balance, the deficit is still nonetheless significantly smaller on an annual basis, having improved from – USD 12.53bn in July 2023. Exports rose 13.8 y/y, while imports fell 7.8% y/y in July. Separately, a survey of Turkish households showed 12-month ahead inflation expectations rising in August, increasing to 73.1% from 72% in the July survey.

US mortgage applications rose modestly in the week ending 23 August, increasing 0.5% w/w, up from a 10.1% fall the week prior. 30-year mortgage rates fell for the fourth consecutive week, dropping to 6.44% from 6.5%, their lowest level since April 2023.

Saudi Arabia’s Public Investment Fund has signed a revolving credit facility, worth USD 15bn. The facility, provided by a group of banks, replaces a previous agreement. With sustained fiscal deficits in recent years, the fund has made use of a combination of asset transfers from the Saudi government, retained earnings from investments and borrowing to finance sizeable investments intended to diversify economic activity.

Today’s Economic Data and Events

• 16:00 GE CPI (Aug). Forecast: 2.1% y/y
• 16:30 US GDP (Q2 second release). Forecast: 2.8% q/q
• 16:30 US Initial jobless claims (w/e Aug 24). Forecast: 232k

Fixed Income

• Moves in US Treasury yields were once again mixed on Wednesday, with traders looking ahead to US inflation numbers due out on Friday. The yield on the 2yr bond fell 3bps to 3.865%, while the 10yr yield rose by 1bps to reach 3.8349%.
• There were broad based declines in European bond yields. The 10yr German Bund fell 3bps to 2.358%.

FX

• The dollar gained against a basket of major peer currencies, rising 0.54% on Wednesday. EURUSD fell sharply, declining 0.57% to 1.112, while GBPUSD reversed much of Tuesday’s gain by falling 0.51% to 1.3191. USDJPY rose 0.44%, closing at 144.59.
• Commodity currencies also weakened against the dollar. AUSUSD declined 0.12% to 0.6785, NZDUSD fell 0.13% to 0.6244, and USDCAD gained 0.28% to reach 1.3481.

Equities

• US equity markets fell on Wednesday, ahead of Nvidia results which were due after the close. The Dow Jones declined 0.4%, the S&P 500 fell 0.6% and tech-heavy NASDAQ lost 1.12%. The Nvidia earnings call disappointed relative to expectations, with Asian markets opening lower this morning on the back of that news.
• European equity indices, in contrast, gained on Wednesday. The Eurostoxx 50 rose 0.29%, the CAC 40 gained 0.16%, and the DAX added 0.54%. The UK’s FTSE 100 was broadly flat.
• Locally, the DFM fell 0.44% and the ADX declined 0.79%.

Commodities

• Oil prices fell for a second day on Wednesday, despite heightened geo-political tension and falls in US stockpiles. It remains unclear whether OPEC+ will reverse production cuts in Q4, as had originally been expected. Brent futures fell 1.13% to USD 78.65/b, while WTI declined by 1.34% to USD 74.52/b.