Markets were roiled overnight and through the NY morning hours by a further collapse in the Turkish lira (5.53 – 6.80), after negotiations between US and Turkish officials over the detention of a US Pastor yielded no progress.

Turkish President Erdogan, in response to the lira’s fall, put kerosene on the fire by calling for citizens to convert euros, dollars and gold “beneath your pillows” to lira, and dismissed concerns over the plummeting currency, saying “if they have their dollars, we have our people, our God”. Trump added more fuel to the fire by tweeting the following:

I have just authorized a doubling of Tariffs on Steel and Aluminum with respect to Turkey as their currency, the Turkish Lira, slides rapidly downward against our very strong Dollar! Aluminum will now be 20% and Steel 50%. Our relations with Turkey are not good at this time!

8:47 AM - Aug 10, 2018[1]

Global equities tumbled, with the NIKKEI off 1.3%, the SCI was unchanged, Eurozone shares were off from 0.7% to 1.6%, and S&P futures were -0.4%.

The euro was slammed lower ($1.1535 - $1.1415 fresh 1-year low), as fear of heavy Eurozone bank exposure to Turkey weighed on the common currency. Investors flocked to the usual safe havens, with the yen advancing to a 2-week high (111.15 – 110.50), and the yield on the US 10-year bond sank from 2.93% to 2.87%.

The US dollar rallied strongly, blowing through stops over 95.66 (7/19 high) to reach 96.30. Gold initially sold off on the dollar strength, slumping down to $1205.80 where support at the 8-bottom low from $1205-08 held. However, safe haven bids joined the bargain hunters, and drove gold to back through $1209 (down trendline from 6/14...

Read more from our friends at Gold & Silver