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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
TURKEY
- Turkey’s 5Y CDS is rapidly approaching a new 5Y high after surging from just below the 400 mark in November as the economic crisis deepens in step with the CBRT easing cycle.
- The CBRT continues to burn reserves to defend the currency (albeit now at wider intervals) as officials double down on Erdogan’s low rates, high growth/exports model, which is currently failing under the weight of a rapidly devaluing lira set against a tightening external environment in 2022.
- The CBRT has burned over $5.5bn in reserves thus far from a perilous net position of -$37.5bn, with over 60% of its public/private sector debt held in foreign currency and many companies struggling with inverted balance sheets.
- Over the weekend, the top business group called for Erdogan to abandon his policy, but this call was firmly rejected – with Erdogan sticking with promises to keep rates low.
- Moreover, boosts to minimum wage and pension programmes look set to compound inflation pressures which are expected to reach 30-40% in 1H22 – driving deeper negative real yields, more dollarisation and sustaining the self-fulfilling cycle of TRY deprecation and higher inflation.
- The CDS is up +223bp since 08 Nov, eclipsing the 2018 highs to target 2020 levels at 635.69. USD bond yields have also skyrocketed with a bear flattening bias in today’s session as markets anticipate and eventual policy U-Turn in the form of substantial policy hikes to stem the bleeding.
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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