Fear the virus will hurt the global economy has driven Treasury yields lower, and the easy money policies of the world's central banks have pushed yields lower around the globe, so the hunt for yield has become ever more challenging.
Some emerging markets bond spreads widened slightly Thursday, as risk markets sold off on reports of a surge in the number of counted coronavirus cases. Brennan Azevedo, emerging markets strategist at UBS Global Wealth Management, said most of the pressure in EM credit was coming from high-yielding debt, with Latin America the weakest region due to a sell-off in Argentina debt, unrelated to the virus.
"Markets initially reacted poorly to the coronavirus outbreak. However, spreads have more recently been supported by signs that the situation seems to be stabilizing, and therefore, we remain engaged. For the rest of 2020, we see spreads tightening 15bp," wrote Citigroup economists earlier this week.
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