(Bloomberg) Venezuela’s debt crisis passed a new milestone as the government missed a principal payment on one of its bonds for the first time this week, boosting arrears on international securities to $6.1 billion.  It was hardly a surprise for investors, who have watched the value of their securities plummet since President Nicolas Maduro announced in November that he would seek to restructure the country’s debt in the midst of an economic crisis. But it reinforced the difficult position creditors find themselves in as the overdue payments pile up with no resolution in sight and
no easy recourse for getting their money back. Maduro’s recent measures to reduce long-standing gasoline subsidies and redenominate the currency by lopping off five zeroes, both set to take effect this month, are steps in the right direction but ultimately unlikely to help the country pay back bondholders, said Siobhan Morden, who heads Nomura Securities International’s Latin America fixed-income strategy. “It still looks like a countdown with economic crisis morphing into a political crisis for the Maduro administration,” Morden said in an Aug 15 note.

The euro area grew at a faster pace than initially reported, with data published by Eurostat showing a 0.4 percent expansion in the second quarter, up from the previous estimate of 0.3 percent. Growth in Germany was 0.5 percent in the three months through June with the solid momentum driven by domestic consumption and investment. Labor data for the U.K. showed unemployment falling to 4 percent, a new 43-year low, while the pace of wage growth eased.

(Bloomberg) The plunge in Turkey’s lira is taking a break today, the currency gaining as much as 6 percent against the dollar to trade at 6.5538 by 5:50 a.m. Eastern Time. In a televised address, President Recep Tayyip Erdogan said the country would boycott American electronic devices, while citizens will  "continue their path with the Turkish lira." His defiance comes as the head of Spain’s Banco Bilbao Vizcaya Argentaria SA’s Turkey unit urged the central bank to tighten monetary policy, echoing calls from other lenders and business groups. The U.S. maintained pressure on Ankara, warning there would be no negotiation until a detained American pastor is released. 

(Bloomberg) A gauge of U.S. consumer prices jumped by the most in a decade in July, eating into wage gains that have barely budged in the past four months and strengthening the case for the Federal Reserve to keep raising interest rates gradually.  The core measure of the Consumer Price Index, which excludes food and fuel, rose 2.4 percent from a year earlier, the biggest advance since September 2008, a Labor Department report showed Friday. From the prior month, both the main CPI index and core rate rose 0.2 percent -- matching expectations.

Policymakers are widely projected to lift borrowing costs when they meet in September, with many investors expecting an additional hike before the end of this year. Inflation has made progress, and the unemployment rate, at 3.9 percent in July, signals the Fed is near its maximum-employment goal.

Trade may become a source of price pressures. In picking Chinese goods to target for tariffs, the Trump administration has tried to avoid directly taxing consumer goods. But that’s getting harder to do as trade tensions escalate. A list of Chinese products due to be hit with tariffs next month includes consumer items such as digital cameras, selfie sticks and electric scooters.

(Bloomberg) Global stocks declined and the lira weakened as Turkey’s economic crisis threatened to spread. The dollar rose with Treasuries after inflation data.  The S&P 500 Index erased a weekly advance after President Donald Trump doubled tariffs on Turkish steel and aluminum imports, escalating a diplomatic row that tipped the nation’s economy deeper into crisis. European and emerging-market equities slid more than 1 percent after President Recep Erdogan’s remarks failed to reassure global markets. The 10-year yield slid to 2.90 percent as data reinforced the Federal Reserve’s rate-hike intentions.  

Geopolitical tensions between the U.S. and other countries set the tone for markets this week, with the latest leg of the lira’s downward spiral triggered by a diplomatic row with America. Earlier, China responded to the Trump administration’s trade war volley with additional tariffs of its own. The ruble hit a two-year low after the U.S. announced new sanctions on Russia over a nerve-agent attack in the U.K.

(CNBC) U.S. government debt yields held at session lows Thursday after the U.S. government reported that producer prices rose less than expected in July, one possible sign of anemic inflation in the economy.

The yield on the benchmark 10-year Treasury note was 3 basis points lower at around 2.939 percent at 9:28 a.m. ET, while the yield on the 30-year Treasury bond was also lower at 3.095 percent. Bond yields move inversely to prices.

The U.S. Labor Department said Thursday that its U.S. producer price index was unchanged in July, falling short of a 0.2 percent increase expected by economists polled by Reuters. The producer price index minus volatile food, energy and trade components, rose 0.3 percent after a similar gain in June. 

In the 12 months through July, the core PPI increased 2.8 percent after rising 2.7 percent in June. The lackluster reading comes as the economy reaches full employment and strong growth; individual reads on inflation are expected to rise as the Trump administration's tariffs on lumber, steel, aluminum and Chinese goods start to influence price pressures.

(Bloomberg) The U.S. announced new sanctions on Russia in response to the March 4 nerve-agent attack in the U.K., with lawmakers seeking “crushing sanctions” under a separate bill for election interference. The ruble extended its steepest slide in almost two years and government bonds slumped this morning. The largest ETFs tracking Russian stocks saw trading volumes soar after the measures were announced.

(Bloomberg) The biggest question on Wall Street enters a third day without an answer: Where’s the “funding secured” that Tesla Inc.’s Elon Musk tweeted about when he said he was thinking of taking the company private? Bloomberg reported that Musk had talks with SoftBank Group Corp. last year with a view to taking the electric-car maker private, but the meeting failed to progress due to disagreements over ownership. People at, or close to, 15 major financial institutions and technology firms said they weren’t aware of financing being locked-in before Musk’s tweet. Shares in the company closed down 2.4 percent at $370.34 yesterday and are slipping in pre-market trading.

(Bloomberg) Turkey’s lira fell to a new record low of 5.449 to the dollar, taking losses for the currency this year to close to 30 percent as investors fret about the outlook for the country’s economy and worsening relations with the U.S. Today’s sell-off comes after a Turkish delegation to Washington refused to commit to releasing a detained American pastor, whose arrest was the catalyst for the imposition of U.S. sanctions on its NATO ally. The situation has deteriorated so much that bankers and traders are talking about the prospect of an International Monetary Fund rescue.