On the other hand, the latest data from the USA and China, the third quarter balance sheet period that will start in the USA, and the turmoil in the bond markets will be closely monitored.
1. IMF’S ASIA STOP
There will be three main topics at the annual meetings of the IMF and the World Bank to be held in Bangkok next week: Economic growth, debts and geopolitical developments.
The updated World Economic Outlook Report to be published on Tuesday by the IMF, which has already had to reduce its global growth forecasts twice this year due to the Iran war, will be the main agenda item of the markets.
IMF President Kristalina Georgieva; He signaled that the report would not present a very encouraging picture, considering rising energy prices, record public debt and uneasy bond markets.
Increasing geopolitical tension, especially the conflicts in the Middle East and Ukraine, will have a large place at the summit. In addition, considering the competition between the USA and China, it will be discussed how regulations for artificial intelligence will be made.
2. EXAM FOR INTEREST EXPECTATIONS
US inflation data to be announced on Wednesday will be one of the last main indicators that the US Federal Reserve (Fed), which wants to rein in high prices, will examine before deciding to increase interest rates again.
The consumer price index (CPI) for September is expected to increase by 0.6 percent on a monthly basis. According to the Reuters survey, core inflation, which excludes volatile energy and food prices, is estimated to increase by 0.2%.
The producer price index (PPI) to be announced on Thursday and the retail sales data to be released on the same day will make the inflation table clearer.
In August, core CPI recorded the fastest rise in the last four months, and this paved the way for the Fed to make its first interest rate increase since 2023.
Although the expectations that the Fed will make a new interest rate increase at its meeting at the end of October have weakened recently, the CPI coming above expectations may change this situation.
3. THIRD QUARTER BALANCE SHEET PERIOD STARTS WITH BANKS
The third quarter earnings period is about to begin in the USA. Banks are among the first companies to disclose their balance sheets.
JPMorgan Chase JPM.N, Goldman Sachs GS.N, Citigroup CN and Wells Fargo WFC.N, among the six largest banks in the USA, will announce their balance sheets next Tuesday. Morgan Stanley MS.N and Bank of America BAC.N will announce Wednesday.
The profits announced by banks are expected to increase by approximately 20% compared to last year. The KBW bank index is down nearly 13% from its historic peak in August as stocks come under selling pressure as U.S. Treasury yields rise to multi-decade highs.
Investors will focus on signals in the market to understand whether the recent increase in public borrowing costs will limit M&A transactions and credit growth and put pressure on funding costs across the sector.
4. ECONOMY DATA TO BE ANNOUNCED IN CHINA
Economic data to be announced next Wednesday in China will reveal whether artificial intelligence-related exports continue to support the economy, which is in a difficult situation due to weak domestic demand.
Exports of China, which has the second largest economy in the world; AI products have recorded four consecutive months of double-digit growth, driven by rising global demand for electric vehicles, solar panels and lithium-ion batteries. However, the long-standing crisis in the real estate sector led to the continuation of the stagnation in domestic consumption.
5. HOW CORRECT IS IT TO ENTER THE BONDS MARKET?
Rising public borrowing costs have begun to attract some investors back into the bond market, as evidenced by the strong demand seen in recent bond auctions in the US and Japan.
But how correct would it be to enter a market in a downward trend?
That’s exactly the question traders will be looking for answers to next week, as there’s little sign yet that the sell-off in the bond market is abating.
While the bond yields of the USA and France have climbed to their highest levels in the last 24 years, market volatility continues to remain high.
While the difference between the 10-year bond yields of France and Germany is approximately 136 basis points, this difference was below 100 basis points a month ago. The speed and magnitude of the increase in France’s risk premium also puts pressure on Italy’s bonds, causing the euro and European stock markets to fall.
