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Inflation Shock Will Hit India, Russia, Mexico Bonds Hardest

  • Nations have smallest margin to spare if CPI quickens: study
  • ‘We are watching inflation very closely’: Goldman Sachs Asset
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If the recent spike up in U.S. inflation numbers is a sign of things to come for global markets, that could prove especially bad news for investors in Indian, Russian and Mexican bonds.

The fixed-income securities of the three countries appear the most vulnerable to any surge in consumer prices, according to a Bloomberg study of 10 emerging markets. Their real bond yields -- those adjusted for inflation -- are the lowest in the group versus their three-year average. This gives them the smallest margin to spare if the nascent inflation signs prove the harbinger of a global price shock, making the bonds less attractive as yields adjust higher.