Turkey Yields Rise to One-Month High on Energy Price Increases

Yields on two-year benchmark Turkish debt rose to the highest level in almost a month after electricity and natural gas price increases spurred expectations that inflation will quicken.

The yield on two-year fixed income securities climbed four basis points, or 0.04 percentage point, to 7.62 percent at 1 p.m. in Istanbul, marking the highest level since Sept. 4 on a closing basis. The lira gained 0.1 percent to 1.7948 per dollar.

Electricity prices for households increased 9.8 percent and for industry 4 percent, the energy market regulator said in an e-mailed statement today. The government raised natural gas prices by 9.8 percent as of Oct. 1, according to the state Anatolia news agency.

“Worries that inflation will accelerate are causing sales in the short-term debt because the market expectation for this year’s inflation surpassed 7.5 percent,” Onur Bayol, a fixed- income at Denizbank AS (DENIZ) in Istanbul, said in e-mailed comments.

Inflation in September will accelerate to 9.2 percent from 8.9 percent in August, according to the median estimate of nine economists surveyed by Bloomberg. The Ankara-based statistics office will release nationwide inflation data on Oct. 3.

The one-year breakeven rate, a gauge of investor inflation expectations that shows the yield premium for fixed-rate bonds over debt linked to price increases, climbed to 8.4 percent, the highest level since Dec. 8, 2011.

To contact the reporter on this story: Selcuk Gokoluk in Istanbul at sgokoluk@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net

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