Consequently, more investors are looking to emerging market yields, despite the risks associated with the developing economies.
Emerging market bonds are being supported by the ongoing low-yield environment. According to the S&P Investment Policy Committee, the latest growth and inflation forecasts out of the Federal Reserve was not any different from figures reported back in June, which suggested that interest rates may remain lower for longer, with the yield on 10-year Treasuries still hovering around a depressed 1.6%.
SEE MORE: Emerging Market Bond ETFs Gain Momentum in Low-Yield Environment
“’Crowded’ trades are emerging market debt (largest 13-week inflows ever of $27 billion), investment-grade debt (inflows in 29 of past 30 weeks), municipal bonds (54 straight weeks of inflows); “vacant” trades: European equities (record 34 straight weeks of outflows), active equity mutual funds (30 straight weeks of outflows),” according to BofA Merrill Lynch in a note posted by Barron’s.
For more information on the fixed-income market, visit our bond ETFs category.
Tom Lydon’s clients own shares of EMB.