Weekly Macro Outlook: Market Volatility and Uncertainties

Key Developments of the Week

This week, markets were shaken by the “absolute nullity” decision regarding CHP congresses in Turkey. The Financial Stability Committee convened to assess the impact. Globally, US-Iran tensions and concerns over the Strait of Hormuz persisted. The Fed’s FOMC minutes highlighted the possibility of a rate hike, deepening inflation worries and pushing up global bond yields. Meanwhile, Chinese and Russian leaders met in Beijing to discuss energy and strategic cooperation.

Turkey Economic Outlook

İş Portföy Chief Economist Hande Şekerci expects Turkey’s Q1 2026 growth to be around 2%. She noted that the space for interest rate cuts has narrowed, and the policy rate may stay at 40%. While domestic demand continues to support growth, weakening exports and slowing investment are creating headwinds.

Global Markets and Central Banks

The Fed’s hawkish signals are supporting the dollar, while the euro remains weak. JPMorgan predicts the Turkish central bank may hike its policy rate to 40% in June. HSBC raised its year-end USD/TRY forecast to 50. ING says Japan’s export strength supports a BOJ rate hike in June. On the commodities front, Citi sees Brent crude reaching $120 in the short term. Gold prices dipped following the Fed minutes.

Expert Insights

Goldman Sachs advised a more selective approach to Turkish banks. Barclays noted that humanoid robots could offset 60% of China’s labor shortfall. Morgan Stanley recommended caution on US equities amid earnings quality concerns. Deutsche Bank warned that the world is facing unprecedented megatrend pressures.

For a detailed weekly review, check our full macro outlook.