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EM Investors Are Favoring Local Bonds as Dollar Debt Lags

Key Points

EM Investors Are Favoring Local Bonds as Dollar Debt Lags Emerging-market investors are for now sticking with local-currency sovereign debt as surging Treasury yields dim the appeal of dollar-denominated developing-nation bonds. Behind the strategy are attractive valuations and the potential to profit from carry trades, where investors borrow in low-yielding currencies to invest in higher-yielding assets.

EM Investors Are Favoring Local Bonds as Dollar Debt Lags Emerging-market investors are for now sticking with local-currency sovereign debt as surging Treasury yields dim the appeal of dollar-denominated developing-nation bonds. Behind the strategy are attractive valuations and the potential to profit from carry trades, where investors borrow in low-yielding currencies to invest in higher-yielding assets.
Treasury (ORG)
Originally published by Bloomberg Markets Read original →