Morning Report: Iran Pressure Lifts Türkiye’s CDS to Year High as Tech Momentum Fades

The failure of U.S.–Iran nuclear talks to produce a concrete agreement has pushed geopolitical risk back to the forefront of global markets. Türkiye’s sovereign CDS spread climbed above 230 basis points, marking the highest level of the year, as investors began pricing in regional risk. Oil remains elevated versus the start of the year, while global equities—particularly technology stocks—are losing momentum following renewed weakness in Nvidia. Safe-haven flows into U.S. Treasuries and the yen underline a more cautious global tone.

Iran Talks End Without Deal, Tensions Stay Elevated

Nuclear negotiations between Washington and Tehran, mediated by Oman in Geneva, concluded without a formal agreement. While both sides described the talks as “constructive” and acknowledged progress, key disagreements remain—particularly over sanctions relief and uranium enrichment.

The U.S. military buildup in the region and President Donald Trump’s warnings of “serious consequences” in the absence of a deal have kept tensions elevated. Markets increasingly view diplomacy as a final opportunity to avoid escalation.

Given the scale of the U.S. military deployment, the possibility of limited, targeted action against Iran cannot be ruled out. However, any intervention would likely be narrow in scope rather than an extended campaign.

For Türkiye, the risk matrix is clear:

• Potential refugee flows due to geographic proximity to Iran

• Higher energy import costs

• Pressure on the disinflation program

• Risks to the current account balance

Oil, CDS and FX: Risk Premium Repriced

Brent crude is hovering around $71 per barrel—up roughly 16% year-to-date. While markets are currently in “wait-and-see” mode, energy prices remain a source of discomfort.

Türkiye’s five-year CDS spread has climbed above 230 basis points, the highest level this year. This signals that markets are actively pricing in geopolitical spillovers.

Borsa Istanbul managed to close 0.5% higher despite recent correction pressures tied both to Iran tensions and technical overbought conditions. Domestic bond yields were largely flat, while USD/TRY edged up to 43.95 in early trading, partly reflecting weekend funding effects.

TCMB Data: Gold Remains the Household Favorite

According to weekly data from the Türkiye Cumhuriyet Merkez Bankası (CBRT), domestic deposit preferences continue to favor foreign currency and precious metals.

In the week ending Feb. 20:

• Retail foreign currency deposits (including precious metals accounts) increased by $1 billion.

• Precious metals now account for 61% of total FX deposits held by households.

The CBRT’s newly released Household Expectations Survey shows:

• Gold is the top investment preference (55.5%)

• Real estate ranks second (30%)

• Only 3.3% favor time deposits

A significant portion of gold holdings remains outside the formal financial system. Funds that enter the banking system generate credit multipliers and support growth. Savings held outside formal channels limit financial deepening and reduce the economy’s credit capacity.

Financial literacy and system integration remain structural priorities.

Foreign Outflows Resume

Foreign investor positioning declined for the first time in weeks:

• $1 billion net outflow from government bonds and Eurobonds

• $0.4 billion inflow into equities

• Net portfolio outflow of $1.6 billion

After several weeks of improving sentiment, last week’s outflows likely reflect rising Iran-related concerns.

On reserves, despite some recent gold price recovery, the CBRT’s net FX position saw a modest decline in late-February settlements. However, headline reserves remain broadly stable around $68 billion, suggesting no lasting damage for now.

Global Markets: Nvidia Slump Weighs on Tech

In the U.S., technology shares remain under pressure. The Nasdaq Composite fell 1.2%, while Nvidia dropped 5.5% despite posting strong earnings.

During bull phases, technology stocks provide the primary tailwind for equity markets. When momentum weakens, broader market rhythm tends to deteriorate—particularly given that roughly one-third of the S&P 500 consists of technology companies.

Asian markets opened cautiously:

• Shanghai down 0.7%

• South Korea down 0.4%

• Tokyo fluctuating near flat

Safe-haven demand pushed U.S. 10-year Treasury yields below 4%, while the Japanese yen strengthened.

Commodities and Crypto

Gold trades near $5,200 per ounce, silver near $90. Long positions initiated around $5,050 (gold) and $81 (silver) are being maintained.

Bitcoin remains range-bound near $67,000. Market participants continue to monitor pullbacks as potential entry points. Energy sector ETF XLE remains on watch.

Media Sector Dealmaking

In the U.S. media space, Skydance-backed Paramount prevailed in the acquisition contest for Warner Bros Discovery. Netflix withdrew after raising its offer, arguing that the revised valuation was no longer financially attractive. Netflix shares rose more than 10% following the decision.

Today’s Agenda

Markets will monitor:

• Türkiye unemployment data

• German unemployment and inflation

• U.S. producer price inflation

• Chicago PMI

Geopolitical risk and technology sector momentum remain the primary drivers in the near term.

Source:  Kıbrıs İktisat Bankası, Emre Değirmencioğlu

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