Courtesy of this a.m.’s edition of Neil Azous and Rareview Macro’s “Sight Beyond Sight”:

“Despite bold central bank decisions over the last 48 hours, the real narrative is not what most investors walking into their offices today believe it is.

After opening up over 2%, the Turkish stock market gradually moved into negative territory, while the Turkish Lira (USD/TRY) has reversed almost the entire move lower observed following the greater than expected interest rate hike.

This is very important to recognize and highlights that there is a full blown attack now underway on the Turkish Lira.

Speculators will not be deterred by a 12% interest rate, especially as history is littered with these kinds of opportunistic events and the monthly cost of funding a short position is marginal relative to the risk-reward of making a profit of multiple percentage points in a day. Here is the next issue and what you need to know. Before dismissing this thought process you should note that this will be repeated at the upcoming Brazil and Mexico central bank meetings, despite completely different monetary policy profiles. This is a classic sign of how indiscriminate emerging markets are at the moment. ”

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