Annual Turkish inflation slowed marginally in April

Headline CPI inflation in Turkey slowed only marginally in April, coming in at 37.9%, down from 38.1% the previous month, while m/m inflation accelerated to 3.0%, up from 2.5% in March. Both of these measures were broadly in line with expectations. Core inflation was at 37.1% y/y, down from 37.4% previously. The disinflationary trend in Turkey has slowed in recent months, with upwards pressure on food prices in April following a severe frost exacerbating the fallout from the lira sell-off in March. The central bank’s next meeting is scheduled for June 19.

The US ISM services index came in above expectations at 51.6 in April, beating the predicted 50.2 and up from 50.8 in March. Employment fell at a softer pace, with the sub-component at 49.0, compared with 46.2 previously, while new orders picked up to 52.3 from 50.4. More concerningly, the prices paid component rose sharply to 65.1, up from 60.9 in March, the highest level in more than two years and suggesting that tariff0related price pressures are already feeding through.

China’s Caixin services PMI slipped to 50.7 in April, down from 51.9 in March. This followed the Caixin manufacturing survey released last week which fell to 50.4, down from 51.2, leading the composite figure to 51.1, down from 51.8 previously. This was a seven-month low for the services PMI and will raise concerns that the trade war with the US is already feeding through to the wider economy.

Today’s Economic Data and Events

No major data releases due today

Fixed Income

• Yields on USTs rose for a third straight session as bets on easing from the Fed this week were pared, with the decision likely to be a hold from the rate-setting committee. The 2yr edged up by just shy of 1bps to 3.8323% while the 10yr was up 4bps at 4.3433%.

FX

• The dollar index sold off for a second straight session yesterday, falling 0.2% against its basket of peers. GBP snapped a four-day losing streak to close up 0.2% against the greenback at 1.3296, while EUR also closed 0.2% higher at 1.1315.
• JPY strengthened 0.9% against the dollar yesterday, falling to 143.70, while weakened by 0.6% to 0.8222 following the surprise flat inflation result.

Equities

• US equity markets broke their recent rally on Monday, with all three key benchmarks closing down. The S&P 500 ended the day 0.6% lower after nine consecutive sessions of gains. The Dow Jones fell 0.2% and the NASDAQ 0.7%.
• European markets continued to gain for the most part, save the CAC which closed down 0.6%. The DAX added 1.1% and the FTSE 100 1.2%.

• Locally, the DFM added 1.0% while the ADX fell 0.1%. The Tadawul added 0.1% in Saudi Arabia.

Commodities

• Both benchmarks sold off on Monday following the OPEC+ announcement over the weekend that it would be bringing barrels back onto the market more rapidly once again. Brent futures ended the day down 1.7% at USD 60.2/b having pared losses through the day – at one point in early trading it was down below USD 59.0/b, the lowest price since late 2021. WTI ended the day 2.0% lower at USD 57.1/b, but both benchmarks are seeing strong gains in early trading this morning.