Surging Turkey Default Protection

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While Brexit has drifted somewhat towards the sidelines, the situation in Turkey represents a real European risk. As the situation has continued to escalate with president Erdogan taking extraordinary measures to restore his executive power, the market has punished Turkey’s current paradigm of chaos. President Erdogan just today announced a three month state of emergency.

As we stated Friday night, we see significant and under talked about risks stemming from this crisis. The recent migration crisis from the Middle East into Europe has already posed issues with regard to domestic violence and increased entitlement spending. Considering the current budget deficits that exist in Europe, seeing another wave of migration, this time coming from a population center of 75 million people, would pose existential problems to European countries.

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*ERDOGAN SAYS TURKEY WILL IMPOSE 3-MONTH STATE OF EMERGENCY,  when was the last civil war that didn’t start with a “State of Emergency?”

Civil War Risk has the cost of Turkey’s 5 Year Default Protection is on the Rise

Turkey CDS newTurkey is quickly moving from a rates story to a credit story.  Investors are no longer betting on rate cuts, they’re far more worried about credit risk.  Pick up our latest trade ideas and report on geopolitical risk management here:

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