(22 October 2019 ) DAILY MARKET BRIEF 2：More easing form CBRT to come

Looking through the smoke and short-term hype one can see that the pieces in the “great game” are moving. Turkey's incursion into Syria has accomplished key objectives. Turkey has successfully removed Kurdish forces from 32km area of northern Syria and testing NATOS determination. In Geopolitics terms, President Erdoğan easily won that round. TRY assets gained on the successful execution of intentions. Images of the US military abandoning their Kurdish allies will not be easily forgotten by America’s global partners, highlighting the reality of alliances in the Trump era. It is clear to everyone that US sanctions will not affect reigning in President Erdoğan regional ambitions. Not even waiting until the smoke cleared did Erdoğan play his next hand, announcing intentions to become a nuclear power. With new allies like Russia, going nuclear will not be difficult. The nuclear card will hold the West hostage in future interventions.

The Central Bank of the Republic of Turkey will meet this Thursday, 24th October. Markets expect policy markets to cut the benchmark one-week repo rate by 150bp bringing it to 15.0%. Governor Uysal has no issues easing policy as this 150bp cut will be added to 750bp of cuts already in the prior two meetings. The central banks are taking advantage of the TRY goodwill post-cease-fire agreements to support Turkey's weak economy.

By Peter Rosenstreich