Fixed Income
Wall Street Touts Emerging-Market Rates Amid Dovish Pivot
- Goldman to Citigroup favor rate-receiver swaps in Latam, Asia
- HSBC prefers long-duration bonds as disinflation takes hold
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With hopes for a monetary-policy pivot in the US and Europe dashed, money managers from Goldman Sachs to Citigroup are touting interest-rate cuts in emerging markets as a major investment theme for the second half of 2023.
Local-currency bonds in the developing world are already outperforming US Treasuries, with their average risk premium falling to a decade low. That’s prompted Goldman Sachs Group Inc. to advise its clients to lock in current yields in Indonesia, Israel and South Africa via interest-rate swaps, and Citigroup Inc. to recommend similar trades in India, South Korea and Brazil. HSBC Holdings Plc, on its part, favors long-duration bonds especially in Latin America.