A different East Med issue
- Turkey's election result has proved a surprise to financial markets. The ruling party failed to achieve an absolute majority, and must either find a coalition party or attempt minority government. The currency markets are the most likely area for volatility to become apparent.
- The political and economic uncertainty in Turkey comes as markets become more focused on the prospects of a US interest rate rise in the wake of the generally stronger than expected employment report in the US last Friday. Markets now look for a more hawkish tone from this week's FOMC.
- The Greco-German crisis continues with that most august of groups, the G7, deigning to notice that something was amiss and to urge a solution. Meanwhile the EU Commission refused to hold the customary emergency weekend talks with Greece over the Greek government's rejection of the creditors' proposals.
- Chinese import data was weaker than anticipated (bad for commodity exporters) but the export data was stronger. There is currency distortion in this of course. Japan's Q1 GDP was stronger than initially thought, but this owes something to inventories.