Politics set to dominate markets in Turkey

The politics will continue to dominate Turkish markets.

"In Turkey, the Central Bank of Turkey (CBT) is expected to remain on hold in Thursday's MPC meeting and to maintain its cautious monetary policy rhetoric", states Barclays. 

The first round of formal coalition talks between the AKP and other parties has already started and will continue towards the end of the week. 

Judging by the leaders' comments, the AKP-CHP coalition now seems the only tangible scenario among various coalition scenarios. At the same time, it is fair to say that the possibility of an early election has increased in recent weeks, not decreased. 

However, Turkish asset prices do not seem to be pricing a higher probability of an early election yet.