EM Bond-Risk Premium Over Treasuries Sinks to Lowest in 13 Years

Global bond investors have turned the most optimistic on emerging markets in 13 years amid a rally driven by greater confidence in fiscal discipline and more money shifting away from the US.

The extra yield investors demand to hold EM sovereign dollar bonds instead of Treasuries has fallen to about 2.5 percentage points, according to JPMorgan Chase & Co.’s measure of risk premium. It’s lowest level since January 2013 and almost 5 percentage points tighter than the spread witnessed at the height of the Covid pandemic five years ago.