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Surprise from Turkey, carry trade and pandemic chronicles

Perhaps the main event of yesterday was the rate hike by the Turkish Central Bank. This is not the key Central Bank of the world. However, it is not typical that the Central Bank from a G20 raises the rate by 475 (!) basis points. As a result, the rate became 15% and this is already more than a serious reason for the emergence of a carry trade in pairs with the Turkish lira. And if Turkey does not scare away investors, then the lira has every chance of forming an upward trend in the foreseeable future.

Especially when you consider that China this week placed government securities at a negative rate. This has never happened before for emerging markets to be placed in the minus. 2020 has once again confirmed its uniqueness.

So, Turkey looks like an even stronger contrast against this background. Considering that there is too much money now (just take a look at the bubbles in the stock markets, the US housing market, and the cryptocurrency market), the temptation to get instead of minus 0.15% plus 15% might be too great to resist.

But in general, the pandemic continues to attract the attention of the markets. Optimists are watching the vaccine race (the AstraZeneca Plc vaccine has sparked strong immune responses in the elderly, and Moderna Inc. begins production of its vaccine in Europe later this month). Pessimists - for the news of lockdowns and figures on the number of cases, hospitalized and deaths. The number of hospitalizations due to Covid-19 in the United States is record in 28 states. California has declared a curfew. At the same time, schools were closed in New York, and New York subway is operating at 25% of its capacity and is going to be reduced by 9,000 people, which will lead to a reduction in transit services by 40-50%.

Yesterday's data on jobless claims in the US came out rather mixed. Continuous claims are still decreasing, but the initial ones stopped the positive trend and began to grow. In general, these data don't seem like a reason for joy.