The ratio trend does still seem to be still headed lower, however should the fall melt-up of 2011 that I am now calling for occur, it might be worth considering that possibility that sovereign debt looks relatively attractive at these levels, especially since the decline over the past two months has taken the ratio back in time to early 2009 levels. [Fall Melt-Up?]
This of course assumes that things don’t get worse, and that the Europeans can contain any follow-through damage occurring from Greece – something which I think is a good possibility given how well publicized the problems are now.
The author, Pension Partners, LLC, and/or its clients may hold positions in securities mentioned in this article at time of writing. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities.
Post updated to correct currency impact on EMB.