Investment insights from Capital Group
Many EM countries have aggressively hiked policy rates
Source: Bloomberg. Data as of April 27, 2022.
EM local, hard currency bond yields top those of U.S. core bonds
Sources: J.P. Morgan, Bloomberg. U.S. dollar EM debt, represented by J.P. Morgan Emerging Markets Bond Index (EMBI) Global Diversified; local EM debt, represented by J.P. Morgan Government Bond Index — Emerging Markets (GBI-EM) Global Diversified; U.S. core debt, represented by Bloomberg U.S. Aggregate Index. Data as of March 31, 2021.
EM yields have risen and fundamentals appear stable
Source: Bloomberg, J.P. Morgan, Morningstar. Data as of April 5, 2022. Yield-to-worst and forward returns callouts shown are for 50% J.P. Morgan EMBI Global Diversified Index (hard currency) / 50% J.P. Morgan GBI-EM Global Diversified Index (local currency). Callout dates for yield peaks are: 5/31/2010, 9/30/2015, 12/31/2015, 10/31/2018, 11/30/2018 and 12/31/2018. Forward returns based on annualized returns. EM: emerging markets. YTW: yield to worst. Yield to worst is the lowest yield that can be realized by either calling or putting on one of the available call/put dates, or holding a bond to maturity. Calling and putting refer to features of some bonds that enable an issuer to redeem the bond early, or a bondholder to demand early repayment from the issuer.
The J.P. Morgan Emerging Market Bond Index (EMBI) Global Diversified is a uniquely weighted emerging market debt benchmark that tracks total returns for U.S. dollar-denominated bonds issued by emerging market sovereign and quasi-sovereign entities. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of account fees, expenses or U.S. federal income taxes.
J.P. Morgan Government Bond Index — Emerging Markets (GBI-EM) Global Diversified covers the universe of regularly traded, liquid fixed-rate, domestic currency emerging market government bonds to which international investors can gain exposure. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of account fees, expenses or U.S. federal income taxes.
The Bloomberg U.S. Aggregate Index represents the U.S. investment-grade fixed-income markets. This index is unmanaged, and its results include reinvested dividends and/or distributions but do not reflect the effect of sales charges, commissions, account fees, expenses or U.S. federal income taxes.
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