Emerging Market Bonds Promise Higher Yields, But Are They Worth the Risk?

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US Dollar Index Futures ニュース

Invesco DB US Dollar Index Bullish Fund,SPDR® Bloomberg International Treasury Bond ETF,Vaneck Emerging Markets High Yield Bond ETF

Bonds Analysis by James Picerno covering: US Dollar Index Futures, Invesco DB US Dollar Index Bullish Fund, SPDR® Bloomberg International Treasury Bond ETF, VanEck Emerging Markets High Yield Bond ETF. Read James Picerno's latest article on Investing.

Foreign fixed-income markets from a US investor perspective have been an unappealing asset class lately – with a glaring exception: corporate bonds in emerging markets. Year to date, this slice of global fixed-income securities is hot, based on a set of ETFs through Thursday’s close . The rest of the field is struggling.

Accordingly, a strategy of hedging out the US dollar exposure has juiced returns further for EM high yield. Meanwhile, the delay in expected rate cuts by the Federal Reserve has been a factor for why central banks in emerging markets have kept rates high. In turn, that’s been a plus for global investors seeking yield.

Currency risk and higher volatility in emerging markets could reduce if not eliminate any premium in these countries’ fixed-income securities for US investors, but for the moment the crowd is overlooking that hazard and bidding up prices that’s left the rest of the bond world far behind.Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors.

 

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