Emerging Market Debt - Risks Remain
Emerging market debt (EMD) recently had a rough month, with the Bloomberg Barclays Emerging Markets Sovereign Index losing 3.3% from April 18–May 18, 2018. The index currently yields almost 6.2%, its highest level since early 2016, and the spread to comparable Treasuries has also increased back to mid-2016 levels near 3.1%, as shown in Figure 1. However, before we can determine if EMD represents an opportunity at current levels, it is important to look at the major causes of recent weakness, which include rising yields, a stronger dollar, and the continued potential for trade disruptions.
Rising Yields and Dol... Read more