Turkish Lira Collapse

Turkey’s central bank is going a different direction than countries battling inflation after the Covid-19 pandemic. Instead of raising rates, Turkey is lowering them.

So far, that has been a recipe for disaster. The country’s inflation probs have only been exasperated by the rate cutes. The country’s currency, the Turkish lira (TRY), has been in rapid decline against the U.S. Dollar. In the chart below, what you’re seeing is what $1 USD is worth in TRY (as of today). As you can see, that figure has skyrocketed in the last few weeks:

With this rapid debasement of the lira, coupled with Turkey’s 20% inflation rate, the country is in deep trouble.

Scores of Turkish citizens have taken to the streets in protest of President Recep Tayyip Erdogan’s policies. Unfortunately, the President and his political party are disaffected. A member of the Turkish ruling party suggested simply eating less: “We can buy two tomatoes instead of buying two kilograms. It’s not that healthy to eat forced crops during winter anyways.”

Earlier this week, he defended his policies, claiming that Turkey is waging an “economic war of independence.” If that’s the case, it’s fair to say they’re losing it. Turkish citizens are rapidly abandoning the lira for the Dollar and other currencies.

More in   Economy

View All

Fed’s Rate Cut Message Finally Heard

Inflation worries had all but disappeared recently. But as usual, the market likes to fool the majority, so we saw January’s consumer prices surprise to the upside today. 🫨

Headline CPI rose 0.3% MoM and 3.1% YoY, topping the 0.2% and 2.9% Wall Street had expected. Core consumer prices, which exclude food and energy prices, rose 0.4% MoM and 3.9% YoY. Shelter was again the largest component driving the increase, climbing 0.6% MoM and 6% YoY. 🔺

Read It

World Bank Warns About Growth

The World Bank says the global economy is on course to record its worst half-decade of growth in about 30 years. 😬

The organization’s “Global Economic Prospects” report is now forecasting global growth to slow for the third year in a row during 2024, falling from 2.6% last year to 2.4%. Even if it rises to 2.7% in 2025, the acceleration over the last five-year period will be about 0.75 percentage points below the average rate of the 2010s.

Read It

U.S. Jobs Data Back In Focus

The bond market continued to rally during a busy day of economic data, with October’s JOLTs data standing out to investors. Let’s recap it all. 👇

First off, October’s Job Openings and Labor Turnover Survey (JOLTS) signaled a continued slowdown in the labor market. Job openings fell to their lowest level since March 2021, at 8.7 million, while the ratio of openings to available workers ticked down to 1.3:1. That’s well below its peak of 2.0:1 set earlier in the year. 📉

Read It

Gas Rules Everything Around Me (G.R.E.A.M)

It was another closely watched day of economic data, with investors focused on employment and consumer sentiment. 👀 

Unlike the JOLTs data and ADP employment report that signaled a continued slowdown in the labor market, today’s nonfarm payrolls bucked the trend again. The economy added 199,000 jobs in November, beating estimates of 190,000 and October’s 150,000 figure.

Read It