What’s Happening in EM: Oil Spikes Upend Local Bonds (Podcast)

Rising energy prices have increased global interest-rate expectations, undermining the popular emerging-markets local-asset trade that had been favored over the past year. The shift implies tighter real rates, greater FX pressure and a risk-off repricing in EM local assets that could trigger capital outflows and widen spreads.

Analysis

Rising energy prices have increased global interest-rate expectations, undermining the popular emerging-markets local-asset trade that had been favored over the past year. The shift implies tighter real rates, greater FX pressure and a risk-off repricing in EM local assets that could trigger capital outflows and widen spreads.