Fixed Income
Bond Buyers See ‘Best Bang for Buck’ in EM as Hiking Cycles End
- Latam central banks raised rates earlier, faster than Fed
- Lower inflation than US in places could spur aggressive cuts
In Mexico, central bankers have signaled they expect to keep rates high for years in order to hit their 3% inflation target.
Photographer: Susana Gonzalez/Bloomberg
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With inflation easing around the world and many central banks nearing the end of their interest rate hikes, a growing chorus of investors say the best place for bond buyers to juice returns is in emerging markets.
The asset class stands to benefit from benchmark rates that are higher — and inflation rates that in some cases are lower — than in the US. In Latin America, central banks acted quicker than the Federal Reserve when price pressures started bubbling up, ultimately tightening more.