Turkey's "strange equilibrium" remains finely tuned, with most nominal indicators in the system (money, credit, wages, inflation, interest rates) sitting in the 30% to 40% y/y range and essentially moving sideways. The lira has been outperforming at the margin ... but not by much.

Enter oil prices. As we stressed in our last review, the two key tail risks that could shock the lira are (i) spiking oil prices and (ii) external bank funding pressures. And here we are, with a big near-term oil shock. So be careful.