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Europe Falls Behind Emerging Markets as Bond-Market Stress Grows

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Europe’s stubbornly low yields are turning emerging markets into a favorite destination of euro-based debt investors.

The yield on a Bloomberg Barclays gauge of developing-nation bonds denominated in the shared currency is trading near its record low as it heads for a fifth month of positive returns. Emerging-market bonds are outperforming their European counterparts this year, taking their yield to a 27-month low relative to the latter.