For the first time in history, Turkish 10Y bond yields topped 13% this morning and the currency just plunged to a new record low against the dollar as the trial of the gold-trader at the center of the "secret gold trade" with Iran begins today and looks set to implicate Turkish leadership as we warned.
As Bloomberg reports, Turkish Deputy Prime Minister Bekir Bozdag is furious...
The U.S. case against Turkish-Iranian gold trader Reza Zarrab “has no legal basis."
The trial is nothing more than an execution through the U.S., of the “unsuccessful Dec. 17-25 coup attempt in Turkey,” by Fetullah Gulen’s organization, referring to a corruption probe in 2013 that was quashed
And according to Ilnur Cevik, a senior adviser to Turkish President Recep Tayyip Erdogan, U.S. attorneys and the judge overseeing the trial have accepted illegally obtained and tampered information as evidence.
There is an attempt to implicate Turkish leaders in the case, Cevik says in remarks on state-run TRT news radio.
Cevik then stated that Preet Bharara, the former U.S. Attorney for the Southern District of New York, “is the one who prepared this plot” and he is linked to Gulen, who is accused of masterminding last year’s failed coup attempt in Turkey, adding that Bharara’s successor Joon H. Kim is now continuing case in same manner.
Both prosecution and judge are linked to FETO, Cevik says (referring to the Turkish govt’s term for people affiliated with Gulen’s network that it considers a terrorist organization).
The case is an effort by Gulenists to come after Turkish govt after last year’s failed coup attempt, he added, saying:
U.S. Justice Dept. should immediately intervene in the case if it wants to “avoid disgrace.”
“The court of the Southern District of New York is seized by the people of FETO. Where is justice in this trial?”
Quite some accusations for innocent men?
And the impact of this uncertainty is clear. The Lira is tumbling to new record lows against the dollar - extending losses following Erdogan's anti central-bank-independence comments last week...
And Turkish 10Y Bond Yields topped 13% for the first time in history...
It seems time's up for delaying this...
“The Zarrab case is the one to watch in terms of U.S.-Turkey relations,” Tim Ash, a London-based strategist for BlueBay Asset Management LLP, said in an email to clients.
“Zarrab is thought to have been close to the Erdogan family and, indeed, he was given Turkish citizenship, alongside Iranian. This is a real stress point."
As Bloomberg notes, Erdogan tried to pressure U.S. officials during the Barack Obama and Donald Trump administrations to drop the prosecution of the trader and has complained in public comments that prosecutors were trying to extract a confession from Zarrab and turn him into an informant. He also claimed President Trump apologized for the prosecution in a phone call.