Emerging market debt looks attractive once again
Bond yields on the segment are at their most attractive since February 2016 at 6.5 per cent
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EMERGING market (EM) bonds were one of the best performing fixed income segments in 2016 and 2017. The strong performance is reflected in a fall in bond yields. Bonds' yields and prices have an inverse relationship.
Yields of EM bonds fell to a low of 4.9 per cent in 2016 and 5 per cent in 2017, levels not seen since the days preceding the Taper Tantrum in 2013, when yields fell to just below 4 per cent.
Fast forward to today, and bond yields in the segment are at their most attractive since February 2016 at 6.5 per cent. What has caused the shift in yields, and is it an opportunity or a trap?
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