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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
- Turkish assets have been under pressure this week, exposing their acute vulnerability to the current market conditions and the CBRT’s unsustainable policy mix.
- TurkGB yields continue to push higher this morning with 2-3Y yields up +13-49bp, going broadly against the trend in EM where countries like SA have seen yields pushing lower prior to and following the hot US CPI print.
- The lira is also diverging the current trend in EM FX of marginal strength against a choppy USD, reflecting idiosyncratic risks inherent in the economy. USD/TRY has accelerated higher this week after breaching the 15.00 handle, which authorities defended vehemently back in March to try keep dollaristaion at bay. 1Y TRY forward points & the 5Y CDS have also surged in recent weeks towards or past their YTD highs.
- With real policy rates at -56% (and widening), trade deficit at $8.17bn (and rising) and policy being kept artificially low against the trend of rising rates globally – this makes for extreme headwinds that look unlikely to abate in the medium term without a significant U-turn on policy.
- Turkey finds itself in a similar position now to the Nov-Dec 2021 period of acute TRY weakness with insufficient reserves to defend the currency, but remaining wedded to its unsustainable policy mix. From here, TRY should continue to underperform its EM peers, while local front end rates surge.
1Y TRY Forward Points
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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