Türkiye advice from JPMorgan and Morgan Stanley

Leading US banks JPMorgan Chase and Morgan Stanley advised their clients to buy Turkish bonds and lira after the judicial decision regarding the CHP was postponed.

Strategists at both banks predicted that investors would shift their focus to the slowdown in inflation and the prospect of interest rate cuts, which would support markets in the coming months.

JPMORGAN ANALYSIS

“Domestic and external geopolitical risks are decreasing,” JPMorgan strategists Michael Harrison and Anezka Christovova wrote in a note on the subject, adding that “conditions are ready” for an increase in interest rates in the summer.

Experts said they were giving weight to the lira by advising their clients to buy TL-denominated bonds.

But JPM strategists said they were holding off on overweighting local bonds, citing growing confidence in the rate-cutting cycle and seeking greater political clarity.

MORGAN STANLEY ANALYSIS

Morgan Stanley strategists led by Hande Küçük said, “With the political uncertainty regarding the CHP case being postponed to September, we expect investors to pay more attention to inflation.” The strategists recommended lira carry trades to their clients via futures.

On the other hand, the bank, which predicted a 250 basis point interest rate cut in July, estimated that similarly sized cuts could be made in the remaining three meetings.