Turkish bonds headed for their lowest close since 2009 and the lira declined for a sixth day as a slump in Chinese industrial profit fueled investor concerns over global growth, curbing demand for riskier assets. Stocks also fell.
The yields on two-year notes rose 22 basis points to 11.61 percent at 5:42 p.m. in Istanbul, the highest level on a closing basis since July 2009. The rate on 10-year bonds jumped 19 basis points to 10.98 percent. The lira was little changed at 3.0471 per dollar after fluctuating between a 0.6 percent gain and a 0.5 percent loss. The Borsa Istanbul 100 Index of stocks dropped 1.7 percent.
Profits at Chinese industrial companies plunged the most since 2011 in August, data on Monday showed, adding fuel to a selloff in emerging markets after Federal Reserve Chair Janet Yellen said the U.S. economy could withstand an interest-rate increase this year. The prospect of rising borrowing costs, coupled with escalating security threats and the second parliamentary election in six months, have left two-year Turkish bonds the worst-performing among developing nations in 2015.
“Risk aversion is taking the toll out of the emerging markets today,” Ipek Ozkardeskaya, a market analyst at London Capital Group, said by e-mail. “Liquidity in Turkey markets was low last week due to public holiday, and this is also a factor accelerating the sell off in Turkish assets.”
Fourteen trades were made on two-year government notes on Monday, compared with 290 trades on 10-year bonds, according to data compiled by Bloomberg.
Markets in Turkey were closed two-and-a-half days for a public holiday.