Yields on Turkey’s dollar bonds have risen significantly across the curve on expectations that the President Erdogan will likely hold power following the May 28 run-off election. Markets had not expected Erdogan to garner the number of votes that he actually did. Thus, analysts note that Erdogan has the momentum and thereby, a stronger chance of winning the second round. This comes after neither Erdogan nor his rival, Kemal Kilicdaroglu secured an outright majority in the first round. Erdogan won 49.5% of the votes while Kilicdaroglu got just under 45% support.

In the chart below, we note that Turkey’s dollar bond yields have moved higher by over 250bp front-end of the curve and back-end yields have moved over 170bp higher. Dollar bond yields up to the 10Y segment are now yield over 10%.


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