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This Economist article has a 12-year chart of emerging-market spreads and yields.

The chart shows the JP Morgan emerging-market bond index, not the DB Emerging Market USD Liquid Balanced Index used by PowerShares Emerging Markets Sovereign Debt Portfolio (PCY) which we are using for our cheap volatility play. However, they are highly correlated.

For emerging market (EM) debt, yields (at 6-7%) are at all time lows, while the spreads versus Treasuries (under 400 bps) are back to credit bubble (2004-2008) levels.

Desperation and ravenous yield hunger causes investors to make mistakes. Would it kill fund managers to sit in cash for a year and NOT buy EM debt during the ongoing, worldwide, sovereign solvency crisis?

The opportunity cost of doing so would be so low - equal to the spread of EM debt over Treasuries - which is less than 400 bps!

Source: Yield Hunger Creates a Bubble in Emerging Market Debt Again