Too Cheap to Ignore, Emerging Dollar Bonds to Fly With Fed
- Risk premium crosses threshold that typically sparks rebound
- Past Fed rate-hike cycles coincided with dollar-bond gains
Visitors ride electric scooters past the Marriner S. Eccles Federal Reserve building.
Photographer: Samuel Corum/BloombergThis article is for subscribers only.
Emerging-market dollar bonds are starting to look like a bargain.
The extra yield offered by developing-nation sovereign debt over U.S. Treasuries has risen above 500 basis points, crossing a threshold breached only two other times in more than a decade. That’s drawing money managers including FIM Partners and Vontobel Asset Management to bet spreads will quickly tumble, just like they did following the previous spikes.