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Early Rate Hikers Hit Jackpot as Local Bonds Trounce Dollar Debt

  • M&G has been rebuilding its holdings of emerging local bonds
  • Most EM currencies undervalued, led by Brazil real, Chile peso
Updated on

Emerging-market central banks were the first in the world to raise interest rates from their pandemic lows last year. That proactive tightening is starting to pay off big time in boosting returns from their local bonds.

An index of debt issued by developing nations denominated in their own currencies has returned about 1% over the past three months, while a similar gauge of hard currency bonds has tumbled 2.8%, according to data compiled by Bloomberg.