Economy
Treasury posts $10.9 billion cash deficit in February
ANKARA
The Turkish Treasury’s cash balance saw a deficit of 397.6 billion Turkish Liras ($10.9 billion) in February, according to data from the Treasury and Finance Ministry.
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Last month, the Treasury’s cash revenues totaled 693.1 billion liras.
Its expenditures, including interest payments of 138 billion liras, amounted to 1.09 trillion liras.
In February, the Treasury’s non-interest expenditures amounted to 959 billion liras.
The cash deficit of $10.9 billion represents the Treasury’s cash revenues minus expenditures, including interest payments, in February.
In January, the cash deficit was 205 billion liras, bringing the total cash deficit in the first two months of 2025 to 602.6 billion liras ($16.5 billion).
Expenditures in January amounted to 1.15 trillion liras, with non-interest expenditures of 999 billion liras.
In January, interest payments totaled 153.5 billion liras.
The USD/TRY exchange rate in the first two months of 2025 was 35.84 liras on average.
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The government forecast a central government budget deficit of 1.93 trillion liras in 2025, which corresponds to 3.1 percent of the estimated GDP.
According to government estimates, the budget deficit will be 2.06 trillion liras, or 2.8 percent of national income in 2026.
European consumer authorities are investigating nine video game companies, including France’s Ubisoft, over concerns their in-game virtual currencies might be violating users’ rights, the EU said Wednesday.
The bloc is coordinating the investigations by the Consumer Protection Cooperation Network, which brings together the competent authorities of the EU’s 27 states.
The network launched talks with the companies last year, but the EU executive said the approach “did not bring satisfactory results.”
The European consumer authorities later identified several games that needed further study, including “Candy Crush Saga,” “Minecraft” and “Clash of Clans.”
The EU said alongside Ubisoft the other companies involved in the probe included “Minecraft” maker Mojang, U.S. giant Riot Games, and Supercell, which makes “Clash of Clans.”
It added the network was separately looking at similar issues in Activision Blizzard’s mobile games “Diablo Immortal” and “Call of Duty.”
It would also probe whether those games had addictive designs and how the firm collects gamers’ personal data.
The bloc’s guidelines on in-game virtual currencies say games must show the real-world price of any required in-game items and currencies.
Games also must show clear information before any purchase, and companies must not force players into unwanted transactions.
Gamers should also be told they can withdraw from contracts within 14 days, including for unused virtual currency, the EU said.
“The industry must ensure that its games do not expose players – especially children – to harmful or unfair practices,” EU consumer protection chief Michael McGrath said.
“The game must be fair, and the rules must be respected.”
He added in a statement: “National authorities, with the support of the commission, will make sure they are enforced.”
European consumer organization BEUC welcomed the “important step” taken by authorities “toward protecting consumers, especially young ones, from the manipulative and unfair practices online that encourage excessive spending.”
The EU has also ramped up efforts to protect children online, announcing earlier this month rules that will force companies to make video games and social media platforms safe before minors use them.
The EU is also expected to unveil consumer protection rules known as the Digital Fairness Act that will cover the video game sector.
Treasury and Finance Minister Mehmet Şimşek said Thursday authorities had moved quickly to contain problems in the investment fund market and prevent them from developing into a systemic crisis, adding that further regulatory measures would be needed.
Speaking online at an S&P Global conference, Şimşek said authorities had “quarantined” troubled portfolio management companies and related funds and had begun the liquidation and resolution process.
The problem in the fund market has been prevented from turning into a systemic crisis, he said, according to a Turkish transcript of his remarks reported by Anadolu Agency (AA). But he noted additional regulations would be needed.
The fund turmoil erupted earlier this month after suspected price manipulation in a number of thinly traded stocks triggered heavy losses and redemption pressures at investment funds.
Almost half a million investors hold stakes in more than 100 Turkish investment funds with combined assets of $20 billion that authorities ordered to be liquidated this month.
Şimşek said the aim was to stop contagion from spreading to the rest of the system, stressing that authorities “have largely succeeded.”
He acknowledged what he said was a “limited” impact, but said “we are not talking about a systemic problem. We will continue to deepen capital markets.”
Türkiye on Tuesday established a fund coordination council chaired by the vice president to oversee the rapid liquidation of the funds. The State Supervisory Council (DDK) has also been tasked with examining the crisis.
The coordination board is due to meet Friday.
Earlier Thursday, Şimşek said authorities were taking steps to ensure investors in troubled funds receive payments as quickly as possible.
The remarks came after the Capital Markets Board (SPK) said it would begin making interim payments to investors in the funds that were ordered to shut down.
Investors in asset managers Tera Portföy, Pusula Portföy, Atlas Portföy and Hedef Portföy will receive their full net investment amount if it is below TL 1 million ($20,404). Investors whose net investment amount is TL 1 million or above will receive TL 1 million as an interim payment.
The procedure will start with money market funds, the SPK said.
In a separate statement, the SPK said the Savings Deposit Insurance Fund (TMSF) opened up “voluntary refund accounts” for those who want to voluntarily return “excessive gains” made as a result of fund sales carried out before liquidation of the funds.
Under Turkish legislation, financial manipulation offenses can be pardoned, or sentences can be reduced if a person “shows remorse” by paying to the Treasury twice the amount of the benefit they obtained.
Speaking separately on Thursday, President Recep Tayyip Erdoğan said developments in the fund market would not pose a threat to the economy.
“We are successfully overcoming the problem that emerged in a certain part of the fund market,” Erdoğan said. “Within the framework of capital market rules, we are resolving this matter quickly, with fairness and justice in mind and without allowing anyone’s rights to be taken away.”
He said authorities would not allow the issue to become a threat to Türkiye’s economic security or social stability.
Authorities are investigating the asset managers for alleged stock manipulation and have arrested 61 people, including top financial executives, as of Thursday.
Türkiye’s factory activity remained in contraction territory in September as the Middle East war continued to weigh on companies, a closely watched survey showed on Thursday.
S&P Global said on Thursday that its Türkiye Purchasing Managers’ Index (PMI) fell to 47.9 in September from 48.1 in August, with firms citing the war in the Middle East as a drag on new orders and output.
Operating conditions have now moderated on a monthly basis for 2-1/2 years, with input cost inflation reaching a four-month high in September as fuel, oil and transportation costs rose, tied to the Middle East conflict.
Softer demand conditions led to a further slowdown in new orders in September. New export orders also eased as international demand remained muted.
Uncertainty around geopolitical conditions put the handbrake on growth in the sector but the average PMI for Q3 was slightly higher than in Q2, suggesting “some tentative signs of recovery,” said Andrew Harker, economics director at S&P Global Market Intelligence.
Factory activity across Europe and Asia showed signs of resilience and remained firm last month, driven partly by the global AI spending boom, even as the energy price shock from the Iran war kept inflation elevated, surveys showed on Thursday.
Rising inflation pressures across the globe have pushed several central banks, including the Federal Reserve (Fed) and European Central Bank (ECB) to start hiking interest rates with more increases expected.
This has contributed to a sharp sell-off in bond markets, pushing up borrowing costs for firms already hit by increased production costs.
However, surveys show that, for now, many factories are reaping the benefit of a surge in demand for their products.
S&P Global’s Eurozone Manufacturing Purchasing Managers’ Index (PMI) rose to 52.9 in September from 52.7 in August, its highest level since May 2022, partly due to stronger demand for artificial intelligence-related goods.
Growth was broad-based across the bloc, with the Netherlands leading the expansion. Germany, the region’s largest economy, recorded solid growth while expansion was modest in France, Italy and Spain.
“The PMIs continue to paint a stronger picture of eurozone industry than the latest data. The sustained strength in surveys points to building underlying momentum over Q3 and to improved industrial support for growth,” said Iain Simmons, economist at Oxford Economics.
“The strength was concentrated in demand for capital goods, specifically AI and defence equipment, while consumer goods demand fell amid price pressure … However, faster cost and selling-price expectations will weigh on the outlook, so we expect the sector’s contribution to be stronger but uneven in Q3,” Simmons said.
South Korea and Taiwan accelerate, Japan lags
In Asia, manufacturing in major exporters Japan, South Korea and Taiwan also improved last month, benefiting from AI optimism.
South Korea, in particular, saw factory activity grow in September at the biggest margin in four months, as export demand grew at the fastest pace in 15.5 years.
Taiwan, a key player in the AI field, saw its PMI hit 56.7 in September, up from 54.7 in August. The 50-level divides expansion from contraction.
“Both new orders and production growth hit the highest for around five-and-a-half years, with anecdotal evidence often linking the expansions to the combined strength of the semiconductor and automotive sectors,” said Usamah Bhatti, economist at S&P Global Market Intelligence, about South Korea.
On Wednesday, surveys showed that China’s factory activity also expanded last month as easing weather disruptions allowed factories to resume operations.
Japan’s S&P Global PMI declined in September to its weakest in six months as output and new orders slowed, although new export orders rose for a ninth straight month due to robust demand from Asia and improved sales to the U.S.
Still, cost pressures remained elevated, with firms continuing to raise selling prices at one of the sharpest rates since late 2022, the Japanese survey showed.
India’s manufacturing sector expanded at the fastest pace in seven months, reviving hiring and lifting business confidence.
Factory activity for other Asian economies was patchy. While Indonesia and Vietnam saw activity expand, the Philippines and Malaysia contracted, surveys showed.
Global bond markets were under renewed pressure on Thursday as the sell-off deepened, with U.S. Treasury yields hitting their highest in decades and threatening stocks, even though tech firms managed to get some boost from AI chipmaker Micron’s blockbuster earnings.
The 10-year U.S. Treasury yield, a yardstick for global borrowing costs and asset prices, rose to 5.34%, its highest since 2002, before dip buyers stepped in, bringing it back to 5.28%.
It posted its biggest quarterly rise this century in the three months to September, with the selling pressure also rippling through bonds in France, Britain and Japan.
Yields have been surging around the world as soaring energy costs fan inflation and as the boom in AI and data center building lifts expectations for growth and for where short-term interest rates will settle.
Stalling peace talks between the U.S. and Iran to end the seven-month-long war in the Middle East have kept crude prices elevated. Brent futures surged 42% in the July-September quarter, and the December contract, the current benchmark, was last at $100 a barrel.
“We have had a prolonged selloff in bonds – they have been correlated with oil prices and also we’ve had strong U.S. data,” said Rory McPherson, chief market strategist at Wren Sterling.
“We don’t have enough buyers who want to buy bonds.”
That all left European shares under pressure, with the broad STOXX 600 down 0.75% and European banks off 1.8%, although U.S. share futures managed to hold steady.
Micron earnings help tech
Helping the U.S. were high-stakes earnings from Micron, a key supplier to AI bellwether Nvidia. They signalled strong demand for AI memory chips, with financial commitments under long-term supply agreements at $32 billion, up from $22 billion in June.
That helped push tech-heavy stock markets in Asia higher. Japan’s Nikkei jumped more than 3%, and South Korea’s KOSPI reversed earlier losses to gain 1.7%.
“Micron’s numbers are another strong validation of AI and memory demand, but markets may increasingly be asking whether we are closer to peak memory shortage, even if demand continues to exceed supply,” said Charu Chanana, chief investment strategist at Saxo.
Bond dip buyers arrive, but for how long?
Global yields surged in September as bond prices tumbled, amid soaring energy costs and the AI boom, leaving investors bracing for a period where interest rates stay higher for longer.
Market focus has been on how long U.S. Treasury yields stay above the psychologically important 5% level, while some investors even weigh the possibility of yields breaching 6%.
The U.S. 10-year yield gained 87 basis points in the July-September quarter, the biggest quarterly rise since 1994, LSEG data showed.
France’s 10-year yield gained 120 basis points in the quarter, the most since 1987, and its yield briefly jumped by a further 10 basis points on Thursday to 4.96%, closing in on the symbolic 5% level.
It too then eased back and was last down 2 bps at 4.82%, though the French budget process is keeping investors on edge.
Yields in Japan have also climbed to multi-decade highs, while Britain’s 30-year yield nudged above 6%.
Somewhere in the mix for bonds also was a reduction in bets on a further Federal Reserve rate hike in October after Wednesday’s softer-than-expected U.S. inflation reading.
Traders are pricing in a 38% chance of a Fed hike this month, versus 50% a day earlier, CME’s FedWatch tool showed.
In currency markets, the winner from the bond selloff has been the dollar, which was stronger again on Thursday.
The euro was down 0.3% at $1.1297, and sterling was down by a similar amount at $1.3223.
Gold was up a touch at $4,174 an ounce.
U.S. President Donald Trump unveiled on Wednesday a massive $200 billion in South Korean energy investment commitments, including $54 billion for a long-mooted Alaska liquified natural gas (LNG) project that Seoul said had yet to be decided on.
South Korea had previously agreed to invest $350 billion in the U.S. and increase purchases of U.S. energy under a July 2025 trade deal with Trump that set 15% tariffs on imports from the East Asian nation.
Besides the Alaska LNG project and pipeline, the Trump administration announced a $22.3 billion natural gas-fired power project in Texas that would be backed by South Korea.
“The United States and Korea have agreed to commence working together on the 50 Billion Dollar ALASKA LNG PROJECT,” Trump wrote on his Truth Social account Thursday, Seoul time.
“A huge 22 Billion Dollar, 6.4-gigawatt Natural Gas Fired Power Project in Encinal, Texas. This will bring tremendous new, reliable Power Capacity to Texas,” he added.
The facility in Texas will provide 6,472 MW of energy to data centers also located in Encinal, a U.S. Commerce Department statement said. It is expected to come fully online by 2032.
Seoul confirmed Thursday that both sides intended to “proceed with a $22.3 billion natural gas power facility” in Texas, dedicated to “supplying power to co-located data centers.”
But it said the Alaska LNG project “will be considered on the condition that it is commercially viable and subject to relevant domestic legal procedures.”
“No decision has been made regarding whether to invest in the project or the scale of any potential investment,” South Korea’s trade ministry said in a statement.
Commercial viability
South Korean President Lee Jae-myung also said Thursday that Seoul would begin working on it on the “condition that 1) its commercial viability is confirmed and 2) it complies with South Korea’s legal procedures.”
Lee said last month that negotiations on the projects had been “very complex and difficult,” adding he had found some terms “difficult to accept” without elaborating further.
Beyond the Alaska and Texas projects, Trump said the two countries were “moving forward” with a $120 billion nuclear power program to build eight large-scale reactors in the United States.
The figure includes $100 billion for construction costs and $20 billion in contingency reserves, the U.S. Commerce Department said.
Lee said Thursday that the nuclear power project would likewise depend on the “commercial viability” of each individual reactor.
The projects in the U.S. will be “pursued in a manner that serves the national interest,” South Korea’s trade ministry said.
The Alaska project, led by New York- and Houston-based developer Glenfarne Group, envisions a 1,300-kilometer (800-mile) pipeline carrying North Slope gas to a liquefaction facility near Anchorage for export to Asia.
While Alaska has decades of history as a petroleum producer, environmental concerns have historically constrained some developments.
But the Trump administration has largely brushed aside those concerns, canceling regulations to reduce emissions that are blamed for global warming.
Trump’s industrial ramp-up envisioned for his widespread energy projects faces a potential labor shortfall, experts say.
The United States needs to fill an estimated 1.7 million skilled trade openings through 2035, according to a report released Wednesday by the Alliance for America’s Skilled Trades, an organization of Ford, Blackstone, Nvidia and other large companies.
The report found today’s training programs produce just 55 workers for every 100 needed.
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