ISTANBUL: Turkish bonds firmed on Wednesday before a central bank meeting which is expected to bring no changes to its policy stance and as markets bet that tapering of US stimulus will be delayed for longer.
Weaker-than-expected September US jobs growth - reported on Tuesday after a delay because of the shutdown in Washington -reinforced hopes across emerging markets that the Federal Reserve will further postpone plans to reduce its bond-buying.
A depreciating and volatile lira has put pressure on the Turkish central bank to hike interest rates in recent months, but the bank is expected announce no changes to policy at around 1100 GMT following its monthly meeting.
That would chime with expectations that the Fed will delay its tapering until next year and Governor Erdem Basci's repeated statements that the bank is not willing to change the interest rate corridor any time soon.
The 10-year benchmark bond yield fell to 8.43 percent by 0730 GMT from 8.52 percent at Tuesday's close. The two-year bond yield fell to 7.56 percent from 7.63.
"Yesterday's US non-farm data clearly paves they way for a later than expected tapering (by the Fed)this brought a fresh wave of buying in emerging market bonds. Turkey is no exception," Garanti Securities strategist Tufan Comert said.
"Yesterday's data also encouraged local banks to increase leverage to bonds."
Turkey and other emerging markets have benefited from a flood of cheap money from the US central bank's $85 billion buying of Treasuries and mortgage-backed securities every month.
Turkey is particularly vulnerable to a reduction in cheap money flows because of its large current account deficit.
The lira weakened to 1.9755 against the dollar, compared with 1.9665 late on Tuesday.
After a run of five positive sessions which started before last week's religious holiday, the main Istanbul share index fell 0.21 percent to 79,111 points. It outperformed the broader emerging markets index which was down 0.66 percent.
Comments
Comments are closed for this article.