Morning Commentary: Turkey debt mixed as lira drops further; Venezuela eyed after drone attack

By Rebecca Melvin

New York, Aug. 6 – Market players were watching Turkey’s sovereign bonds early Monday as the Turkish lira dropped further into record negative territory against the dollar amid trade tensions with the United States.

The U.S. Trade Representative said Turkey’s duty-free access to U.S. markets is being reviewed after that country imposed retaliatory tariffs on $1.78 billion of its U.S. imports.

The move came as U.S.-Turkey relations have been strained regarding the detention of U.S. pastor Andrew Brunson since 2016 on charges of terrorism and participating in a coup attempt that year.

Turkey’s 5 1/8% notes due October 2028 were a little higher at 85.142, which was up 0.3 point on the day.

Emerging-markets debt in general was subdued as trade issues were front and center in the minds of portfolio managers. China has said that it might impose tariffs on all U.S. imports into that country.

Meanwhile a drone attack over the weekend against Venezuela’s president Nicolas Maduro has raised concerns about the implications that a renewed police crackdown might have on markets as the authorities arrested six suspects tied to an alleged assassination plan.

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