Turkish markets continued to improve en route to their pre-Dec. 17 levels. Interest rates fell to their lowest levels since the political crisis as investors have priced in stability and are beginning to price in a relatively uneventful presidential election, where the current frontrunner, Prime Minister Recep Tayyip Erdoğan, is poised to be elected president in the first round of voting.The stock market is trading in a holding pattern ahead of a meeting of the Monetary Policy Committee of the Central Bank of Turkey, or TCMB, as it is commonly known.The committee will discuss inflation data and address whether interest rates at their current levels are sufficient to attract investment into Turkish debt markets. A slew of data will be released this week on Thursday as the Monetary Policy Committee releases their decisions regarding lending rates.Foreign investment into Turkish markets continues to rise while prices of insurance against political instability, in the form of credit-default swaps or CDSs, continued to fall. The Central Registry Agency (MKK), released data for the last week, in which foreign participation in Turkish equity markets continued to increase from 63.7 percent to 63.8 percent. Turkish CDSs traded at 2 percent, down 0.08 points from their levels last week when they traded at 2.08 percent.The Turkish benchmark equity index, the BIST-100, stood at 73.300 points Monday afternoon, unchanged in the last week.The Turkish lira was also unchanged at 2.12 liras to one U.S. dollar. The benchmark two-year Treasury Bond saw its yield plummet to 9.67 percent down from 10.04 percent while the ten-year Treasury Bond fell to 10.02 percent. The massive drop in the interest rate of the benchmark bond indicates that markets are expecting a drop in rates in the near-term and see no political crisis on the horizon. Both the two-year and ten-year bonds traded at their lowest levels since the political crisis of Dec. 17.The TCMB is widely expected to keep the lending and borrowing rates of 12 percent and 8 percent intact and also leave the repurchase rate unchanged at 10 percent. Some financial commentators have suggested that the time is ripe for a decrease in rates. However, even if the market data suggest this is what markets want, the TCMB will probably not drop rates so soon after increasing them. Any change in rates would paint the TCMB as being "knee-jerkish" in response to current events. Members of the committee may also want to wait to see how the European Central Bank (ECB) will entertain talk of imminent quantitative easing (QE) in the Eurozone. Any QE-type stimulus will drop Eurozone bond yields, making Turkish bonds more attractive. If the ECB does take such action, funds will flow from European fixed-income markets to Istanbul, which will in turn will cause Turkish bond yields to fall.The TCMB would then be able to bring rates down without fear of a flight of capital from Turkish markets.On Thursday, while the markets will be focused on the TCMB's rate decision, important data in the form of capacity utilization and real sector confidence will also be released. There should be no major surprises on Thursday with any of the data and this will leave markets to continue to inch up ahead of the announcement of the nomination of the political parties' candidates for president to be chosen this August. If the AK Party nominates Erdoğan as expected and also nominates a politically strong candidate to succeed the prime minister, markets should rally. Barring any unforeseen geopolitical crises, this rally should last until the end of the summer when presidential elections will take place.