Toothless inflation threats could mean emerging market debt boom
3 years, 10 months ago

Toothless inflation threats could mean emerging market debt boom

Hindustan Times  

A great era for emerging-market bonds may be only just beginning, according to a study of break-even rates. Inflation is a critical component for bond returns, as shown by the slide in global government debt in January as the Biden administration announced it would roll out $1.9 trillion of additional US stimulus. “The disinflationary outlook offers a potential capital gain and a stable high income from emerging-market debt,” said Akira Takei, a global fixed-income money manager in Tokyo at Asset Management One Co., which oversees the equivalent of about $510 billion. “The pandemic has yet to subside, so global economies overall see muted inflationary pressure.” Inflation is a critical component for bond returns, as shown by the slide in global government debt in January as the Biden administration announced it would roll out $1.9 trillion of additional US stimulus. “Inflation may eventually settle at historically low levels in these economies.” Methodology Forward break-even rates were derived from five- and 10-year inflation-linked government bonds issued by seven developing nations, except for Mexico where five- and eight-year notes were used.

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History of this topic

China’s Weaker Yuan Sends Ripples Across Emerging Market Currencies
1 week, 5 days ago

China’s Weaker Yuan Sends Ripples Across Emerging Market Currencies

Live Mint  

Emerging-market currencies dropped Wednesday, with an index of developing-nation currencies heading for its steepest one-day loss in a week and a half. The depreciation supports Chinese exporters but raises risks of capital outflows and financial instability, challenges that could ripple through emerging markets tied to Chinese demand, as cheaper Chinese undercut competitors in other developing economies. The correlation between China’s …

Asian Stocks Gain on China Recovery, Weaker Dollar: Markets Wrap
1 month, 1 week ago

Asian Stocks Gain on China Recovery, Weaker Dollar: Markets Wrap

Live Mint  

Asian equities climbed, aided by signs of a stabilization in China’s economy and a retreat in the dollar. “The strength of the dollar has obviously taken away some of the returns from emerging markets local currency bonds, but we think the more attractive opportunity at this point is in the hard currency aspect of emerging markets,” Niaz said, referring to …

Is Goldilocks gone? Emerging markets face uncertain path under Trump
1 month, 2 weeks ago

Is Goldilocks gone? Emerging markets face uncertain path under Trump

Hindustan Times  

* Is Goldilocks gone? Emerging markets face uncertain path under Trump Investors turn cautious as they await Trump policy details * Emerging currencies hit by dollar rally and tariff fears * Some, such as Argentina and India, could thrive By Libby George LONDON, - Investors hoping for a "Goldilocks" moment for emerging markets in 2025 following years of global interest …

Strong investor demand boosts overseas bond markets
1 year, 10 months ago

Strong investor demand boosts overseas bond markets

Live Mint  

Some parts of the global bond market roared back to life in January, with sales of new debt securities off to a record start in Europe and across emerging markets. Investors fled emerging markets last year as the dollar surged and Russia’s invasion of Ukraine sent commodity prices soaring. Recent days have brought a roughly $14 billion bond deal sold …

Bailout euphoria by IMF signals peak of pessimism in emerging markets
2 years, 3 months ago

Bailout euphoria by IMF signals peak of pessimism in emerging markets

Live Mint  

It may be too early to turn bullish on emerging markets -- but a raft of bailouts pledged by the IMF and China has some investors deciding it’s too risky to stay bearish. While some countries are still waiting, with Ukraine’s premier on Saturday criticizing slow progress from the IMF in agreeing a new assistance package for the war-torn nation, …

Why Poor Nations Now Face a Pandemic Debt Crunch
2 years, 10 months ago

Why Poor Nations Now Face a Pandemic Debt Crunch

Bloomberg  

Some of the world’s poorest countries are in deep financial trouble. Indebted governments from Latin America to Africa spent money they didn’t have to shore up rickety health systems against the coronavirus pandemic and provide a safety net for citizens. Then Russia’s war in Ukraine sent grain and fuel prices surging and central banks began raising interest rates to quell …

Looming Fed rate hikes have emerging markets dreading deja vu
2 years, 10 months ago

Looming Fed rate hikes have emerging markets dreading deja vu

Al Jazeera  

Indonesia, Brazil, Mexico, South Africa and Turkey could be roiled when the US Federal Reserve starts raising interest rates, say analysts. This mix – a tightening by the Fed combined with high debt or mispriced currency in EM countries ­– led to some pain in 2013, when the Fed began to “taper” its post-2009 stimulus policy of purchasing US Treasuries. …

How emerging economies bear the burden of the dollar hegemony
3 years, 3 months ago

How emerging economies bear the burden of the dollar hegemony

Live Mint  

As the last instalment of this column observed, there is a rising drumbeat of debate over the unwinding of America’s unconventional monetary policy—in particular, large-scale asset purchases, often called quantitative easing —as well as the eventual normalization of its policy interest rate to above the near-zero level at which it has been stuck since the global financial crisis. Readers will …

Developing countries stymied by rising interest rates and COVID
3 years, 3 months ago

Developing countries stymied by rising interest rates and COVID

The Hindu  

The more a country is intertwined with the global economy — whether through industry, trade or tourism — the greater the potential damage from the COVID-19 pandemic. "For emerging markets, there is then a risk of a sharp rise in the cost of capital and a flight of capital," Clemens Fuest, head of the Munich-based Ifo Institute, told DW. "Before …

Emerging economies must heed the World Bank’s subtle warnings
3 years, 5 months ago

Emerging economies must heed the World Bank’s subtle warnings

Live Mint  

The World Bank’s Global Economic Prospects report, published twice a year, is the most important source for evaluating the current and future outlook for emerging markets and developing economies. First, the world economy is recovering from the pandemic, but while advanced economies, with already successful or rapidly progressing covid vaccination programmes, appear set to return to or even exceed their …

Goldilocks year awaits emerging market assets
4 years ago

Goldilocks year awaits emerging market assets

Live Mint  

Emerging-market investors seem to have everything going for them right now, with the November rally offering a hint of what 2021 may have in store. Yet, for all the euphoria, foreign positioning in bonds and equities for developing nations excluding China remains light, and Deutsche Bank AG’s Sameer Goel, says the rally is far from over. “It’s Goldilocks for emerging …

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