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  • Emerging Markets Debt Daily

    Turkey’s Single-Digit Inflation - Cut!

    Natalia Gurushina, Economist, Emerging Markets Fixed Income
    October 03, 2019

    Turkish inflation drops to single digits, clearing the way for more rate cuts. Mexico’s consumer confidence rebounded slightly in September.

    Turkey’s disinflation trend just got a massive boost. Yearly core inflation nearly halved to 7.54% in September, and yearly headline inflation collapsed to 9.26%. A very high base effect played a big part in it. So, this kind of disinflation is likely to be transitory, but with the price growth in single digits and below consensus, it would be difficult to resist calls for deeper rate cuts.

    Mexico’s consumer confidence showed tentative signs of recovery in September, but this might not be enough to harden the central bank’s policy stance just yet. Even though the government might have bought some time on the domestic policy front, external environment remains uncertain and the domestic labor market conditions continue to deteriorate, posing headwinds to consumption and gross domestic product (GDP) growth in the coming months.

    It’s Day 4 of my Asia research trip and it’s our second day in Indonesia. The main thing that we learned today from local businesses is that the health of local consumer—a big growth driver—should not be taken for granted, as the government’s and the private sector’s largesse might not be sustainable in the longer-term. Good news is that the government is stepping up infrastructure efforts, which should support Indonesia’s near-term growth. We also got confirmations that the political elite is not against several key elements of President Joko Widodo's reform agenda, which should reduce implementation risks. Some of you were asking whether the plan to build the new capital is real—apparently yes. Off to Thailand in the evening!


    PMI – Purchasing Managers’ Index: economic indicators derived from monthly surveys of private sector companies; ISM – Institute for Supply Management PMI: ISM releases an index based on more than 400 purchasing and supply managers surveys; both in the manufacturing and non-manufacturing industries; CPI – Consumer Price Index: an index of the variation in prices paid by typical consumers for retail goods and other items; PPI – Producer Price Index: a family of indexes that measures the average change in selling prices received by domestic producers of goods and services over time; PCE inflation – Personal Consumption Expenditures Price Index: one measure of U.S. inflation, tracking the change in prices of goods and services purchased by consumers throughout the economy; MSCI – Morgan Stanley Capital International: an American provider of equity, fixed income, hedge fund stock market indexes, and equity portfolio analysis tools; VIX – CBOE Volatility Index: an index created by the Chicago Board Options Exchange (CBOE), which shows the market's expectation of 30-day volatility. It is constructed using the implied volatilities on S&P 500 index options.; GBI-EM – JP Morgan’s Government Bond Index – Emerging Markets: comprehensive emerging market debt benchmarks that track local currency bonds issued by Emerging market governments.; EMBI – JP Morgan’s Emerging Market Bond Index: JP Morgan's index of dollar-denominated sovereign bonds issued by a selection of emerging market countries; EMBIG - JP Morgan’s Emerging Market Bond Index Global: tracks total returns for traded external debt instruments in emerging markets.

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