Turkish CPI





Here’s Mr. MarkCudmore, Bloomberg Macro Strategist’s view on this morning’s Turkish CPI print.

Turkish CPI today may grab the attention of lira traders, but they’d be wise not to read too much into the number.
The median forecast is for September CPI to print at 21.1%, which sounds terrible. But recent data show that a hard-landing is coming to Turkey and that, combined with the 625bps hike last month, will quickly curtail inflation. Manufacturing PMI fell to 42.7, the lowest on record, while the nominal trade deficit was the smallest in more than nine years as imports have plummeted. The economy is rebalancing fast and there could still be a positive Turkey narrative for 2019 if these trends continue.
Unfortunately for Turkey, external factors may soon completely overwhelm the domestic story. In lira terms, Brent crude remains more than 35% above its level of only two months ago and the rise in oil prices will continue to pressure the energy importer. And now, Italy is threatening to trigger its own crisis which would have knock-on effects throughout the region.
All this means that the Turkey CPI print may be the catalyst for some volatile short-term re-positioning, but it’s a data point the macro traders shouldn’t dwell on.


-R.W.N II, yours in 322.



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