- Who could have thought raising interest rates 425 basis points would be bearish? A curious rally following Turkey's defense of the lira - it jacked rates to 12% from 7.75% - has completely reversed. One feels a 1992-like vibe where the Bank of England hiked like crazy to defend the pound, but then ultimately had to let it go (also creating a bottom in stocks).
- In Europe, the Stoxx 50 (FEZ) is off 1.3%, with Turkey (TUR) now down 2.3%.
- South Africa joins the party, unexpectedly hiking its benchmark interest rate by 50 basis points to 5.5%. EZA -2.8%.
- A check of Brazil (EWZ -1.3%) and India (EPI -1.1%) - where monetary policy has also been tightened this week - finds them lower as well.
- The money is flowing into U.S. Treasurys which continue a big 2014 rally. The 10-year yield is off five basis points to 2.71%. TLT +0.3%, TBT -0.5%.
- Europe ETFs: ETFs: FXE, VGK, EUO, FEZ, ERO, EU, DFE, IEV, EPV, EZU, HEDJ, DRR, GXF, FEU, GUR, FDD, EUFX, ESR, UPV, ULE, FEP, ADRU, URR, FEEU, EURZ, DBEU, EURL, FIEU
- Treasury ETFs: TBT, TLT, TMV, TBF, EDV, TTT, TMF, ZROZ, SBND, TLH, DLBS, VGLT, UBT, TLO, LBND, TENZ, TYBS, DLBL
Markets rethink Turkey's rate hike and head south
Jan 29 2014, 10:54 ET