Looking at bond markets really makes me sad. Nobody learned anything from the financial crises. If I see that Brazilian EUR-denominated govies with a fantastic BBB- rating yield between 0.86% (maturity in Feb 10) and 4.48% (maturity Feb 15) I don't even need to look at other EM bonds to know its time to sell. Everything.
Tom.
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Imho EM bonds offer yields that are higher than government bond yields in the OECD countries the main reason according to me is that growth rates (and to a large extent the economic fundamentals) are looking better in the EM'. But most importantly i think many EM currencies also look set to rise in value during the coming year(China Effect??) which i think is the main Bet for most US&European investors locking in the Gains early.(translating to Dollar&Euro) however thanks to the recent financial crisis I think that there is a shift in the thinking from the short term trader mentality to looking at these from a 10-, 15- or 20-year time horizon. I think the long-term prospects are better than they are for the developed world.
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PS: By EM i refer to Brazil,Russia and Asian countries, I am not very sure about the smaller East European ones if you do know something on that please be kind enough to post more 'GYAN' on that.
PPS: Please do post regularly on Fixed income to most of us this a fantastic learning experience(and it comes free of cost!)
ppps: I stand corrected! (of course a little google knowledge is a dangerous thing!) they are just carrying a story on CNBC on the High Yield&EM fixed inc bubble :)
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