Morning Commentary: Markets eye U.S. tax bill vote; Turkey opens slightly wider on slower flow

By Rebecca Melvin

New York, Dec. 1 – Emerging debt market players were watching developments on a variety of fronts early Friday as trading activity slowed on the last day of the trading week and the first day of the month. But market activity could pick up if there are developments regarding passage of the U.S. tax reform bill, a market source said.

The Republican bill was looking like it had the votes to pass as negotiations continued ahead of a Senate vote that could take place as early as Friday. The tone was more positive than late Thursday when the nonpartisan Joint Committee on Taxation released analysis that said the Senate plan wouldn’t meet the party’s goal of paying for itself through stronger economic growth.

According to the JCT analysis, the plan would generate $458 billion in revenue from economic growth but add an extra $51 billion in interest payments over the next 10 years, leaving the net cost at about $1 trillion over the decade.

Elsewhere, spreads on Turkey’s credit opened 2 basis points to 5 bps wider as the Iran sanctions evasion court case was set to continue in New York, and Turkey banks remained in focus.

Turkish banks mentioned in the case include AktifBank, DenizBank, Halkbank, VakifBank and TC Ziraat, all of which have denied allegations of involvement in activities that violated U.S. or international sanctions.

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