Are we at a tipping point for EMD?

EMD

For fixed income investors, evidence of a pick-up in inflationary pressures is always a little unnerving.

And if inflation signals come at a time when bond yields are hovering close to their lowest levels on record, the sense of unease is bound to get more intense. This is the tricky situation currently facing investors in emerging markets (EM) debt. On the inflation front, fears are growing that a sudden 20% increase in wheat and maize prices could push consumer prices in the developing world to levels that could halt – or possibly even reverse – a recent wave of monetary easing. That would not be good news for either dollar-denominated or local currency sovereign EM bonds, which have both ...