Emerging market carry currencies are the financial assets most sensitive to tightening of global financial conditions — the proverbial canaries in the coal mine. The near-perfect correlation between the Mexican peso and the Turkish lira during the past two weeks strongly suggests that a global shift out of highly-levered assets has begun, starting with the most exposed assets.

There are political problems bearing on both TRY and MXN, to be sure, but they are entirely different; MXN doesn’t care about Syria (the currency is positively exposed to oil prices in a small way), while TRY doesn’t care about the NAFTA negotiations. Mexico does most of its trade in dollars with North America, while Turkey does most of its trade in euros with the EU.

The fact that they have traded in virtual lockstep suggests that the problems that afflict each country separately have little to do with the trading patterns of the past couple of weeks. A global monetary phenomenon — a general tightening of credit conditions — appears to have begun at the weakest point in the credit system.