We expect EM local currency bond yields to remain low

Positive vaccine news has not changed our view that monetary policy in many emerging markets (EMs) will generally remain loose for some time yet. That is a key reason why we still expect EM local currency government bonds yields to stay low by historical standards next year.
Jonas Goltermann Senior Markets Economist
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EM Markets Chart Book

Contagion from Turkey’s crisis likely to remain limited

Spillovers to other emerging markets from Turkey’s ongoing currency crisis have been limited so far and we think this will remain the case even if Turkey’s financial markets remain under pressure.

24 November 2021

DM Markets Chart Book

We think US inflation compensation will rise further

US 10-year inflation compensation has risen by another 20bp or so over the past month and we think it will increase further as inflation in the US proves more persistent than most expect. This is one of the reasons why we forecast the yields of long-dated US Treasuries to rise over the next two years.

19 November 2021

Global Markets Update

We now expect E-Z “peripheral” spreads to widen a bit

We now think that, rather than remaining broadly stable, the spreads of euro-zone “peripheral” bonds will widen somewhat over the next two years as the ECB gradually normalises monetary policy. That said, we still expect spreads to remain low by historical standards.

17 November 2021

More from Jonas Goltermann

FX Markets Update

Taking stock of the carry trade after the FOMC’s surprise

While the shift towards rate hikes in several key emerging markets has provided a boost to their currencies, we doubt that the carry trade will fare as well in the second half of the year.

6 July 2021

Capital Daily

This may be as good as it gets for the Aussie and Kiwi

Although the RBA’s hawkish message today and further strong data out of New Zealand sent the Aussie and Kiwi higher, we are becoming less confident in our existing, bullish forecasts for both currencies. In our view, much of the good news on strong domestic recoveries and monetary policy normalisation in Australia and New Zealand is now discounted, but the downside risks from the economic slowdown in China and its impact on commodity prices are underappreciated.

6 July 2021

FX Markets Weekly Wrap

The US dollar rally may have further to run

The US dollar is ending the week stronger against most currencies, although it has fallen back a little this afternoon despite the stronger-than-expected non-farm payrolls report. While that reaction is perhaps a bit puzzling, the bigger picture is that the greenback has extended its post-FOMC rally against the other major currencies this week. We expect it to make further headway, provided that US data continue to come in strong.

2 July 2021
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