MORNING BULLETIN: Housing prices have peaked!

The CBRT’s June Monetary Policy Committee’s regular decision was the number one agenda item in Turkish financial markets yesterday. The CBRT kept the basic interest rate constant at 14%, in line with market expectations. Prior to the decision, the possibility of a small discount was also discussed. In the policy text published after the decision, we saw that the week-long repo rate began to lose its role as a policy tool with each passing meeting. Likewise, CBRT says it will continue to use liquidity and collateral policies as restrictive. Within the framework of macroprudential measures, we believe that the CBRT could further increase the required reserve ratios and the obligation to purchase long-term bonds (collateral pool) of newly implemented banks, if necessary. Thus, the same effect will be created indirectly, without raising interest rates.

The market effect of the MPC’s decision was neutral. We have seen that the USDTRY rate, which was following a horizontal course at 17.35 levels before the decision, did not change significantly after the decision.

In the foreign exchange market, the public is the seller and institutional investors with a current account deficit are the buyers; We can easily say that the balances are ‘skewed’. The BIST100 index ended the day up 1.21% and the banking index down 2.4% yesterday. The CDS risk premium dropped slightly, testing below the psychological level of 800.

BRSA announced many measures, especially in the real estate sector, last night. In its simplest form, the amount of home loan that can be used will decrease as the price of the house rises. For houses with a housing value of less than 2 million TL, 90% of mortgage loans will continue to be used. The loan value ratio was determined at 70% for homes with a home value between TL 2-5 million. The maximum loan amount has been set at TL 3.5 million for homes worth between TL 5 and 10 million. There is no housing credit for houses with a housing value above TL 10 million.

We consider it highly likely that this move will slow down the real estate sector. As you will remember, we have been constantly expressing over the last 2 months that this is not a good time to buy a home. On the other hand, BRSA significantly increased the risk weighting of loans to be granted to legal entities that may carry out derivative operations with non-residents (increasing it to 500%).

The PMI data (key growth indicator) announced yesterday morning in the Eurozone and Germany (leader, industry and services) did not live up to expectations. On the European front, economic uncertainties caused by declining exports and inflation pressured domestic demand, and PMI data for the manufacturing and service sectors, which make up two-thirds of the German economy, fell to 52.8 in June ( 55 May) and not meeting expectations (54.5), EURUSD pressured the parity. Testing the 1.0580 level yesterday morning, the euro quickly dropped below the 1.05 level. European equity markets succumbed to selling pressure in the first half of the day, with depressing PMI data added to falling commodity prices on concerns over slowing economic growth.

The price of a barrel of Brent crude rose to $110 this morning, albeit partially, after hitting a bottom of $107 midweek. However, on the natural gas side, we see that the bearish move is getting harder. Henry Hub natural gas prices dropped to 6.2 usd/mmbtu this morning, trading at the lowest level since early April. We warned investors last week, drawing attention to the 6.55 level technically. If the downtrend continues, we think USD 5.8 could be driven lower. Let’s note that the drop from the top on the natural gas front was 36% in the last 2 weeks. Of course, while the downturn in energy prices is good news for global inflation, we think it’s also a harbinger of the expected downturn!

We see that the downward movement in the energy market is accompanied by precious metals. The price of silver per ounce also broke above the psychological $21 level this morning and dropped to the critical technical support zone at $20.80. Likewise, gold is trading at $1,820 an ounce. From a technical point of view it might be a bit repetitive but we will be back to the fields with the $22 and $1,870 levels surpassed if confirmed by the weekly close respectively.

US stock markets ended higher last night. As we mentioned in our newsletter the other day, the markets are not comfortable. While the easing of commodity prices due to recession concerns sometimes dampens morale, it also alleviates inflation fears to some extent, as we mentioned in the paragraph on natural gas. This price behavior provoked partial optimism in the financial markets yesterday. For example, while Nasdaq ended the night up 1.6%, we see that bullish mood has spread to US equity futures as well as Asian equity markets this morning. While the benchmark is trading above 1% on the Tokyo stock market, the rise in the Korean and Taiwan stock markets is around 1.5%. We see that the blood loss in the Japanese yen has stopped, albeit slightly, with the weather easing a bit.

In the news feed, European Union (EU) leaders agreed to grant “candidate country” status to Ukraine and Moldova. The decision was announced during the EU leaders’ summit in Brussels. European Council President Charles Michel described the decision he shared on his social media account as a “historic moment”.

On the financial markets agenda, one can follow the domestic capacity utilization rate and the real sector confidence index. From the outside, UK retail sales, the IFO index in Germany and the University of Michigan consumer confidence index in the US can be tracked.

Natural gas

Let’s note that the drop from the top on the natural gas front was 36% in the last 2 weeks. Technically speaking, we draw attention to the 6.55 level. If the bearish continues, we think the 5.8 level could be driven even lower.

real interest rates

Although CBRT and BRSA took steps to slow the expansion of loans, TL loans increased 1% weekly, while the rate of change was 28.9% compared to the beginning of the year. The growth in vehicle loans, which grew 84.3% in relation to the beginning of the year, is quite remarkable!


In the week ended June 17, according to data adjusted for the parity/price effect, individual DTH decreased by US$0.72 billion compared to the previous week, while corporate DTH increased by US$0.66 billion. The total value of the inventory is $212.7 billion, the lowest level since July 2020.

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