From Yahoo Finance: 2025-04-20 08:30:00

Emerging market local-currency bonds are outperforming dollar-denominated bonds with a 3.2% return this year compared to 0.7%. The weak dollar and potential interest rate cuts in developing nations are driving this trend. Local-currency bonds now offer lower yields than dollar bonds due to global trade turmoil and US tariff threats.

Expectations of central banks easing monetary policy have led to a drop in interest-rate swaps in emerging economies. The dollar’s decline has boosted the performance of developing-nation currencies, making local-currency bonds more attractive. The dollar’s expensive valuation and long positioning are causing caution in issuing dollar-denominated debt in emerging markets.

Goldman Sachs and other analysts believe EM local-currency bonds will continue to outperform, especially in the face of recession fears. Chinese banks and Bank Indonesia will make key announcements next week, while Malaysia, Singapore, and South Africa will release inflation data. South Korea will reveal its first-quarter GDP, with focus on tariff uncertainties impact.

Read more: Threat to US exceptionalism spurs rush for emerging local bonds