Loading ...Commenting on the statement, Bloomberg macro analyst Stephen Kirkland said that it signals he’s sticking to a nationalist message and is uninclined to deliver the hard measures Turkish assets need, which according to some analysts such as ADM’s Marc Ostwald include a 500 bps rate hike and an IMF bailout. As a result, option markets are now pricing in a one-in-five chance of USD/TRY reaching 7 per dollar in a month, from about 1% probability yesterday.
For the Turkey watchers, here is today’s key sequence of events, all times London:
- 12.00BST: President Erdogan to speak
- 12.30BST: Finance Minister Albayrak announces new economic model
- 14.30BST: President Erdogan to speak again
And as fears of contagion mounted, the EURUSD tumbled to the lowest level in a year, running stops as it broke below the barrier level of 1.15…
… as the DXY spiked to YTD highs amid a broad flight to safety with the USD bid seen across all pairs. The scramble for safety meant that both USTs and bunds rallied however in a more contained manner and the 10Y bund yields were lower by ~3.5bps.