- Performance of emerging markets local currency bonds has been negatively impacted by the U.S. dollar’s strength since mid-year, despite the higher real yields and upside growth surprises in many emerging markets.
- Currency returns can be volatile, and external factors can have a bigger short-term impact on an emerging markets currency (EMFX) even if relatively attractive fundamentals may provide longer-term support.
- In addition, we believe there are technical factors that may serve as a tailwind to emerging markets local currency bonds, particularly if there is a pause or reversal of recent dollar strength.
For further details see:
Technical Tailwinds May Lift EMFX