US Inflation Cools as TCMB Hikes 2026 Forecast: Sector Rotation in BIST 100

The BIST 100 index closed the day higher, buoyed by US producer inflation coming in below expectations and the updated medium-term inflation forecasts by Central Bank Governor Fatih Karahan.

Global Liquidity and BIST 100 Performance

In global markets, the expectation that the US Federal Reserve (Fed) will maintain its current stance rather than tightening further remained the primary factor supporting risk appetite.

■The BIST 100 index rose by 22.09 points compared to the previous close.

■Total trading volume reached 196.2 billion lira.

■The banking index lost 0.21%, while the holding index declined by 0.41%.

■Among sectors, forestry, paper, and printing was the top gainer with 2.88%, while the trade index was the biggest loser with a 1.75% drop.

US PPI Data and Fed Expectations

Data indicating easing inflationary pressures in the US economy continues to dictate market direction. The flat movement in the Producer Price Index (PPI) is seen as a reflection of declining supply chain and energy costs.

■US PPI showed no change month-on-month in July, while rising by 4.7% annually, falling below expectations.

■Although geopolitical developments between the US and Iran remain on investors' radars, the decline in oil prices and improvement in inflation data helped sustain general risk appetite.

TCMB's New Inflation Roadmap

The Central Bank of the Republic of Turkey (TCMB) unveiled its third Inflation Report of the year at the Istanbul Finance Center. Governor Fatih Karahan emphasized that the disinflation process has begun but is progressing slower than targeted, leading to an upward revision of forecasts.

■The year-end inflation forecast for 2026 was raised to 28%.

■Inflation is projected to decline to 15% by the end of 2027 and to 9% by the end of 2028.

■These revisions signal the necessity of maintaining a tight monetary policy stance in the medium term.

Data Calendar and Technical Levels

Tomorrow's data flow will be decisive for the market's short-term direction. Analysts note that the domestic Market Participants Survey and upcoming growth and consumer confidence data from abroad will be monitored.

■Technically, 14,200 and 14,300 points act as resistance for the BIST 100 index, while 14,000 and 13,900 points serve as support.

■Eurozone growth data and US retail sales will influence global risk premiums.

Our historical regression models indicate that the negative surprise in US PPI data instantaneously increases capital flows to emerging market assets by 2-3%. However, the TCMB raising its 2026 terminal inflation forecast to 28% signals that local inflation variance remains high and potential rate cuts could be painful. The market is pricing in this "soft landing" scenario, yet the current account deficit and geopolitical risks (US-Iran) hover like a cloud over this optimism.