Bonds
Junk Bonds at Risk as Emerging Markets Await ‘Trumponomics’
- Rally looks shaky as Tariff curbs may hit poor nations hardest
- Countries with heavy debt, dollar dependence most vulnerable
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The junk-bond rally in emerging markets risks being just an interlude between the debt crisis of the past four years and a new bout of distress in the next four, if Donald Trump does what he says he will.
A Bloomberg index of high-yielding sovereign dollar debt is heading for a 15% surge this year, the biggest annual gain since 2016. Global investors are rewarding countries such as Argentina, Sri Lanka and Ghana for healing their defaults and embarking on economic reforms. This rally has shown resilience even to the US yield spikes of the past two months.