Volatility Is Creating an Attractive Entry Point for Emerging Market Debt

Emerging market (EM) bonds experienced a month of acute weakness, and EM currencies have lost 4.1% of their value against the US dollar over the same period.

What caused the volatility? A rally in the dollar was the initial spark. Concerns about a global economic slowdown have grown over recent weeks, and market participants feared high supply this quarter ahead of the Federal Reserve meeting on 2 May 2018.

In our view, this sell-off is likely to be temporary; fundamentals for the EM debt markets remain strong. For investors, this means it may be a good time to enter the EM debt markets.

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