Traders Line Up for ‘Once-in-a-Generation’ Emerging Markets Bet
- Latin American debt is bright spot amid high rates, cheap FX
- Short bets on EM local-currency debt ETF drop to four-year low
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One of last year’s best wagers in emerging-market debt is getting a fresh boost from bets the Federal Reserve will finally begin cutting interest rates.
Optimism is sweeping through domestic bond markets as investors anticipate the Fed will soon start lowering rates, with Wall Street set to scour this week’s meeting for clues on timing. Alongside a weaker dollar, a potential US pivot would help coax central bankers in emerging markets to ease — resulting in a potential windfall for holders of local-currency debt.