Markets stage a mid-August pivot, on the watch for fallout coming from Turkey’s currency crisis

A fresh air of cautiousness is usually hanging over markets, in addition to also in which could continue inside week ahead as investors navigate Turkey’s currency collapse in addition to also the fallout across global markets.

On Wall Street, traders pivoted quickly coming from rooting for a fresh all-time high inside S&P 500 to playing defense as global equities sold off instead. Bonds rallied in addition to also the dollar rose to its high of the year on Friday.

“I think traders will be very careful inside next week or two. You could taste the fresh highs, in addition to also they pulled the rug out coming from under them,” said Art Cashin, UBS head of floor operations. “I think Trump is usually going to keep the pressure on.”

The S&P 500 ended the week 0.2 percent lower at 2,833, at This particular point just about 40 points coming from the January high of 2,872. Treasury yields, which move inverse to prices, fell as investors sought safety coming from market turbulence. The 10-year yield was at 2.86 percent late Friday after edging near 3 percent earlier inside week.

“This particular is usually a very significant move in Treasurys,” said Ian Lyngen, head of U.S. rates strategy at BMO. Lyngen said the 15 basis point move showed a shift in strategy coming from investors, at This particular point seeking a safe haven. The move lower in yields came even having a 10-year high in core consumer inflation Friday, in addition to also auctions during the week for record amounts of 10-year notes in addition to also 30-year bonds.

“I think the January 26 high is usually going to be the high for a while,” said Peter Boockvar, chief investment strategist at Bleakley Financial Group. “We’re coming off a great earnings season, in addition to also in which wasn’t enough to power us to fresh highs” for the Dow in addition to also S&P.

inside week ahead, July retail sales data comes out Wednesday, which could be an important look at the direction of consumer spending at the start of the second half of the year. There are also some key earnings, including Macy’s on Wednesday in addition to also Walmart on Thursday. Deere reports Friday.

China also has key data, including retail sales in addition to also Industrial production Tuesday, which will be watched for any damage coming from trade wars with the U.S. yet also for progress in China’s efforts to stimulate its economy.

The focus, of course, will stay on trade in addition to also potential progress in Washington on the talks toward a fresh North American Free Trade Agreement. yet the tumult in Turkey in addition to also spillover inside emerging markets could dominate trading early inside week.

The Turkish lira was down about 14 percent Friday alone, in addition to also global markets reeled on worries in which Turkey’s declining economic state in addition to also the collapse in its currency would certainly hit the European banking system in addition to also spread across emerging markets.

Turkey’s President Recip Tayyip Erdogan failed to offer any economic solace when he spoke Friday, declaring in which “they have their dollar, we have our god.” President Donald Trump also said he would certainly double tariffs on Turkish steel in addition to also aluminum, after imposing U.S. sanctions earlier in week because of Turkey’s detention of an American pastor.

Strategists expect emerging markets to remain under pressure when Asian markets open early Monday. “Everyone was searching for yield, in addition to also in which’s what’s changing. All of a sudden people are becoming more discriminating. They become less tolerant of tough macro situations,” Boockvar said.

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