The 2023 Bond Market Winner: Emerging Markets

There has been an unexpected winner in the bond market in 2023: emerging market bonds. This is especially true for emerging market bonds priced in local currencies. Currently, the gap in government borrowing costs between emerging markets and U.S. Treasuries is at its best level since 2000. The reason is that investors are pricing in […] August 07, 2023 [Option Sensei] [The 2023 Bond Market Winner: Emerging Markets]( There has been an unexpected winner in the bond market in 2023: emerging market bonds. This is especially true for emerging market bonds priced in local currencies. Currently, the gap in government borrowing costs between emerging markets and U.S. Treasuries is at its best level since 2000. The reason is that investors are pricing in imminent interest rate cuts in some big emerging economies, faster and deeper than in developed economies like the U.S. Here’s how you can profit… Better Central Banking? This actually makes sense. There has been a large narrowing of the credibility gap between central bankers in the developing world, who never swallowed the bilge that inflation was “transitory” and central bankers in the west, who did. For example, the Central Bank of Brazil (a country not exactly known for prudent monetary policies), raised rates a year before the Federal Reserve moved. Today, it seems inflation in the country has been tamed, and is now falling. Inflation in Brazil was 3.2% year on year in June, just below the central bank target of 3.25%. Interest rates remain at more than 13%, so there a lot of room for cuts, which are expected soon. Even in Mexico, inflation is falling. It was down to 5% year on year in June versus policy rates of more than 11%. So again, there is a lot of room for the country to cut rates and for bonds to gain in price. And we are seeing this pattern repeate elsewhere in the developing world, which is why investors in emerging market bonds are taking note that inflation may now fall faster than emerging market central banks cut rates, generating steeper real yields on local debt. The reality is that central banks in Latin America and eastern Europe—regions that are home to the best performing bond markets in the world this year—acted more quickly to raise rates in response to the inflationary pressures that emerged when pandemic restrictions were eased and their economies reopened. [Continue Reading at Investors Alley]( SPONSOR [Breakthrough A.I. Just Predicted What the Stock Prices of Tesla, Nvidia, and Apple Will Be 30 Days from Now]( One of the world's most cutting-edge financial tech companies just launched Project An-E - an A.I.-driven market forecasting system that accurately predicts stock prices one month into the future. For a limited time, you can get a "sneak peek" of some An-E's predictions, so you can see what it's capable of for yourself. You could start making sizable gains in as little as a month. [Click here to learn more.]( NOTE: If URLs do not appear as live links in your e-mail program, please cut and paste the full URL into the location or address field of your browser. [Privacy Policy]( | [Terms & Conditions]( This is a paid advertisement.This is not a solicitation for the purchase or sale of securities. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice, prior to making any investment decision. Advertisements and sponsorships are provided as a service to Wealthpop users . Wealthpop is not responsible for their content, services or products. The statements and opinions contained in this advertisement are not those of Wealthpop, and Wealthpop disclaims any liability for or arising from such statements and opinions. You are hereby advised that Wealthpop is receiving a fee as compensation for the distribution of this advertisement. [Click here to unsubscribe]( Copyright © 2023 Wealthpop. All rights reserved. Magnifi Communities, 1 Penn Plaza, Suite 3910, New York, NY 10019