Equities weaken, bond yields rise

Financial markets in Emerging Europe have generally performed poorly over the past month, with equities having dropped back and the region’s bonds having been hit by the sell-off in developed economies’ debt markets. The Turkish lira has strengthened over the past month as weaker data from the US has pushed back expectations for the timing of the first rate hike. But we think the lira is still vulnerable to renewed weakness, possibly triggered by next month’s election.