13 August 2018 by jbchevrel
Turkey was under pressure today again, the 5y CDS was bid above 600bp at some point, slightly after noon in London. There was $756M reported cleared notional according to OTCStreaming. Today’s move takes the YTD to +420bp on the 5y and +84% on $TRY. Over the weekend, the Turkish Finance Minister Albayrak reiterated that he was against capital controls. Erdogan had made it clear earlier that he is against rate hikes. Their strategy is to desperately try to prevent/punish TRY shorts, rather than pushing through tangible measures to bring back investor confidence. Today’s sell-off was different from Friday’s in the sense that it looked more idiosyncratic than systemic. Among CDX EM constituents, we have had two distinct buckets: the ‘high-yielders’ (TURKEY +130 ARGENT +60 LEBAN +33) and the others (-5/+10). Elsewhere, risky assets were down but to a lesser extent than on Friday (Main +1.5 IG +1 SPX -0.1% SX5E -0.5%).