Emerging Market Bond Yields Are Sending a Worrying Signal
- Sovereign yields surge amid Treasury selloff on Fed jitters
- Yield anomaly earlier seen during 2008 crisis, 2020 Covid rout
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A rare anomaly seen during times of extreme stress has returned to emerging markets.
The slump in US Treasuries this week has exacerbated a selloff in developing-nation debt, sending the yield on bonds in the Bloomberg EM Aggregate Sovereign Index to a one-year high of 8.93% on Tuesday. That exceeded the earnings yield of 8.63% on stocks in the equities benchmark, the MSCI Emerging Markets Index.