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U.S. inflation remains higher than in many EMs, weakening the dollar’s appeal. Rising hedging costs make Treasuries less attractive, while EMFX strength signals deeper disinflation momentum.
EM Bonds Extend Gains As The Dollar Faces Mounting Pressure
Summary
- U.S. inflation remains higher than in many EMs, weakening the dollar’s appeal. Rising hedging costs make Treasuries less attractive, while EMFX strength signals deeper disinflation momentum.
- The VanEck Emerging Markets Bond Fund (EMBUX) was up 1.83% in May.
- During May, South Africa and Zambia local currency led outperformers. An underweight in Brazil hard-currency bonds led underperformers.
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