The lira strengthened 0.2 percent but was still off a two-week high hit on Monday after a narrow victory for Erdogan in Turkey's referendum on constitutional reform.
Erdogan has argued that a concentration of power is needed to prevent instability, but opposition parties challenged the result. European monitors said the referendum did not meet international standard.
Turkish dollar bond prices rose across the curve to five-month highs and five-year credit default swaps traded at a two-week low of 233 basis points (bps), according to IHS Markit data.
The average yield spread paid by Turkish sovereign bonds over US Treasuries on the JPMorgan EMBI Global Diversified narrowed by 3 bps to 305 bps, an 11-day low.
Greg Saichin, chief investment officer for emerging markets fixed income at Allianz Global Investors, said the tight result was a surprise.
"The markets are taking this initial result as positive in so far as the buck now stops with one person and in theory political noise should come down," he said, adding that the next battleground will be the planned 2019 election.
"Should the economic outlook deteriorate, or the system move towards a more autocratic style that does not sit well with voters, chances are that the next election will be again about a referendum on Erdogan's new powers," he said.
Turkish economic weakness was exposed in data released on Monday showing a rise in the budget deficit and unemployment at a seven-year peak.
Away from Turkey, emerging market assets sold off, with MSCI's emerging equities index down 0.3 percent as tensions with North Korea kept investors away from riskier assets.
Amongst the biggest fallers were Hong Kong down 1.4 percent to a one-month low, and Chinese mainland stocks, down 0.8 percent. But South Korea steadied, rising 0.1 percent to an 11-day high.
The United States and South Korea have pledged to forge a stronger alliance but US Vice President Mike Pence said the free trade agreement between the two will be reviewed. The Korean won fell 0.7 percent to a one-week low.
South African assets remained under pressure, with stocks down 0.7 percent and the rand slipping 0.5 percent against the dollar, off a near three-week high.
Russian dollar-denominated stocks fell 0.6 percent and the rouble weakened 0.5 percent off a two-week high, with oil prices heading back towards $55 a barrel.
The Hungarian forint firmed 0.2 percent against the euro after slumping to a four-month low on Monday. Thousands of Hungarians rallied in Budapest on Saturday against what they said were attempts by the government to silence critical voices, in the latest mass protest.
Ashmore, a bellwether stock for the emerging markets asset management sector, saw quarterly net inflows for the first time in nearly three years, helping to drive a 7 percent rise in its total assets.