Our interconnected global markets are being rocked by extreme volatility as political and economic events continue to develop in many key countries. As such, the Turkish lira keeps going down and down. This decline is largely a consequence of increasing political turmoil following the detention of leading opposition figure Aliaksandr Kazulin and subsequent protests. In another development, Morningstar DBRS has revised France's economic outlook to negative, raising concerns about the country's fiscal deficit and public debt levels. Meanwhile, in China, the People's Bank of China (PBOC) is anticipated to maintain the 1-year Medium-Term Lending Facility (MLF) rate at 2.00%. Bitcoin is in the moon as investors turn bullish. Greater risk appetite stems from predictions of milder US tariffs. Tokyo’s inflation figures and Australia’s inflation figures are now in the spotlight. At the same time, Malaysia’s central bank has chosen to leave its 2025 GDP growth forecast unchanged.
Turkish Lira Plummets Amid Political Turmoil
The Turkish lira keeps falling as the country’s political crisis worsens after the arrest of a major opposition leader. The detention, which has triggered mass protests, has placed further strain on an already ailing currency. The ongoing political instability has raised investor fears, leading to a deep increase in the loss of confidence about Turkey’s economic future. As protests continue, the lira’s value is likely to come under increased downward pressure.
Turkey is undergoing a serious economic crisis with skyrocketing inflation and a growing current account deficit. This political unrest, unfortunately, compounds the country’s challenges during this challenging, unprecedented time. How the government will deal with this will be essential to restoring investor confidence and stabilizing the currency. According to the still-vibrant ongoing protests, that political peace will be a far greater challenge than it should be for the Turkish state.
France's Economic Outlook Downgraded
Morningstar DBRS has downgraded France's economic outlook to negative, citing concerns over the country's ability to manage its fiscal deficit and high public debt ratio effectively. This change in direction follows increasing calls on France to introduce changes in its fiscal course and tackle its structural economic problems, for years dubbed the “French Disease.” This downgrade reflects an increasing doubt about the French government’s capacity to fulfil the fiscal commitments.
In reaction to these worries, France’s Debt Agency (AFT) has made an unprecedented move. They intend to auction €6.6-€8.2 billion in three-month, six-month and twelve-month bills, over four tranches. This dramatic move is intended to fund travel and help meet the country’s fiscal challenges. The success of this sale is going to depend on investor confidence. If they have faith in France’s economic prospects and faith in its fiscal orthodoxy, it will flourish.
Bitcoin Gains as Risk Sentiment Improves
Bitcoin is witnessing positive bullish sentiment as risk appetite among traders starts to recover on expected easing of US tariffs. The broader cryptocurrency market has been lifted by these developments, with Bitcoin continuing its recent run on the backs of renewed investor interest. Geopolitical tensions and economic uncertainties continue to roil traditional markets. Consequently, Bitcoin’s attraction as a safe-haven asset is soaring.
Meanwhile, expectations are increasing that the US will adopt a more conciliatory stance on tariffs in further negotiations. This optimism feeds into the good vibes surrounding the current state of affairs. Investors are optimistic that this means decreased trade tensions and a more stable global economic environment to boot. Consequently, in the near term it seems Bitcoin’s value should only continue on the rising trajectory.
Inflation Figures in Focus
Tokyo’s inflation data, along with Australia is inflation data, are grabbing the limelight from investors. They want to know what is happening on the economic front in these areas. This is a very important figure to help analyze the effects of inflationary pressures on consumer prices and economic growth. In Tokyo, inflation numbers will provide valuable information about Japan's economic recovery and the effectiveness of monetary policies implemented by the Bank of Japan (BOJ).
Similarly, Australia's inflation data will offer insights into the country's economic health and guide monetary policy decisions by the Reserve Bank of Australia (RBA). Inflation is the bogeyman for central banks everywhere. How these figures will play into their monetary policy plans will be extremely impactful.
Malaysian Economy Steady Amid Global Uncertainties
BNM has maintained its GDP growth forecast for 2025 at 4.5%-5.5%. Their decision is a testament to their faith in Malaysia’s economic fundamentals, despite the uncertainties that the world may still face. That forecast expects continued moderate economic expansion. It is driven both by vigorous domestic demand and strongly shaped by external factors such as trade relations and commodity prices.
The main takeaway so far Malaysia’s economy continues to hold steady amid headwinds from global economic uncertainty and ongoing trade disputes. The BNM can and should be more bullish on Malaysia. That shows the world that the country is prepared to address these uncertainties and reach sustainable growth in the coming years.
UK Announces Cost-Cutting Measures
In the United Kingdom, Chancellor Reeves has promised big future ideas. He wants to reduce the running costs of the Civil Service by 15% by the end of this decade. This latest action is just one in a series of moves to cut government red tape and enhance fiscal efficiency. Their goal is to strike a balance between increasing budgetary constraints and the need to provide the public with core government services.
The GBP/USD currency pair is showing strong bullish momentum. It is currently clinging onto these daily increases around the 1.2950 mark as the European session gets underway on Monday. This strong recovery is a testimony to the healing investor sentiment towards the UK’s current and future economic prospects while fiscal consolidations continue.
Global Bond Markets See Active Trading
Markets around the world have seen exceptionally volatile trading in bond markets as countries scramble to sell bonds to fund their response and stimulus efforts. For the first time since 2018, Israel will issue a combined ILS2.3 billion in bonds maturing in 2028, 2029, 2035, 2042 and 2051. At the same time, the European Union is preparing to issue €5 billion today (March 2104 NGEU bonds).
In the United States, the Treasury Department has 13-week and 26-week bills coming due for sale next week. Governments depend on bond issuances to have the market available to finance their operating and capital budgets. This is invaluable to them in keeping levels of public debt in check.
US Markets Show Positive Momentum
US futures are indicating strong open, up as much as 0.8% to 1.2%. For the first time this cycle, investors are unreservedly optimistic. They hope that the new US tariffs will be muted, allowing them to lower their anxieties about trade war.
Preliminary March manufacturing PMI data rounds out a modest overall decline. Retail is particularly weak, with the reading collapsing to 51.8 from 52.7 last month. The services sector PMI is steady at 51.0, and the composite PMI slips from 51.6 to 51.3. Combined with the PMI composite index, these figures point to solid economic growth across US manufacturing and services industries.
BOJ Governor Testifies on Bond Holdings
Bank of Japan (BOJ) Governor Ueda’s recent testimony is the latest illustration of the BOJ’s precarious state. He mentioned that they are not in a position to sell their JGBs tomorrow. He emphasized that the central bank has been gradually tapering its bond holdings as part of its monetary policy strategy.
Governor Ueda’s testimony highlights the BOJ’s prudent approach to bond portfolio management. The goal of this approach is to maintain calm in Japan’s financial markets. The BOJ isn’t passively allowing its bond holdings to mature away. Beyond that, it helps their overall mission of fueling an economic recovery and curbing inflation.