Developments at the mining tragedy in Soma overshadowed Turkish financial markets as the nation turned to the area for developing news. Markets were stable on low volume and continue to move in a narrow trading pattern ahead of the August presidential elections.The benchmark BIST-100 index was down to 75,009 off its week ago high of 76,350 as equity markets searched for a sense of direction.Increased "worker compensation" fees for companies that are involved with potentially hazardous activities appear to be in the works, however, markets did not react negatively to such speculation.The quarterly unemployment was reported last Thursday and came in 0.1% above expectations at 10.2% which may have led to the slight drop in equities.Thursday the Monetary Policy Committee (PPK) of the Central Bank of Turkey (TCMB) will announce the borrowing, repurchasing, and lending rates, currently at 8 percent, 10 percent, and 12 percent respectively. I expect a decrease in the borrowing rate, although judging from the columns of my colleagues, I appear to be alone in this expectation.Some economists have said they expect reserve ratios at banks to be relaxed allowing lending institutions more room to lend. If the rates are cut this will probably not happen, whereas if reserve rates are left intact, this may be a conciliation price given to the bank-heavy securities markets.Credit Default Swaps, insurance against political and economic stability, were stable at 1.85 percent, up 0.01 in the last week from their lowest levels in a year. The mining tragedy was used by opposition parties to build-up anti-government sentiment in Soma and in cities across the country, however, markets appear not to have bought their chances of being effective.Fixed income markets continued to rally as yields continued to drop on both the benchmark 2-year bond and long-end 10-year bond. Yields fell from 9.25 percent to 9.02 percent and from 9.42 percent to 9.24 percent respectively.The Turkish Lira saw some profit-taking slipping back to 2.092 Liras to the U.S. Dollar, down from last week's level of 2.075 Liras to the greenback. The Central Registry Agency's (MKK) foreign participation in Turkish Equity's index sits steady at 63.7% down slightly from its level of 63.8% last week.As summer approaches, investors will continue to be focused on developments at the European Central Bank, and whether or not the quantitative easing type scheme floated around by Mario Draghi, will be implemented or rejected. Europe is desperate for an infusion of capital and it seems the U.S. Federal Reserve's execution of this QE was successful as talk of its tapering and ultimately conclusion are very much en vogue at the Fed.Bank of America published a report last week that reflects negative sentiment waxing at U.S. buy-side investment funds. Fund managers reported retreating to cash at the highest-levels since 2012 and the Investment Company Institute reported cash outflows in excess of $10 billion in May, putting it on track to be the largest outflow since August of last year.U.S. Indexes are mixed as the S&P 500 sits near its all-time high whereas the Nasdaq is down near 20% in the last 3 months. The evaporation of billions of dollars from market capitalizations of high-tech American firms may signal another impending recession in the U.S. while unemployment rates appear to be improving.Some economists continue to argue this decrease in unemployment is actually because of workers dropping-out of the labor market altogether.An exit of capital from European and U.S. markets should bode well for emerging markets, including Turkey, and should push the BIST-100 higher as investors look for greener pastures.Recently the publication of "Capital," by French economist Thomas Piketty has reinvigorated the debate of laizess-faire capitalism and the recent rejection of a referendum in Switzerland, which would have established a federal minimum wage, may signal difficulties to come for economies in the developed world. Turkey's growing middle-class and positive demographics should make it a prime destination for investors that want to hedge against political uncertainty in these countries.I don't expect any surprises in the run-up to the presidential election in Turkey this August and believe fixed income markets will continue to rally alongside Turkish equities.