During 2018, the future of bond yields are a
particular threat as emerging market
governments have reduced their monetary and
fiscal spend in recent years.
the borrowings of emerging market
governments, corporates and households are
aggregated, they are about 1.6 times higher than
economic output. That figure has grown by half
since the fnancial crisis.
While these borrowings have increasingly
been made in local currency, half of emerging
market corporate debt is still denominated in
That leaves their long-term yields
fundamentally anchored by developed market
policy even as short-term yields are more
reflective of domestic monetary policy.
Despite these two sizeable headwinds
for emerging markets, there are signs that
some developments may boost emerging
markets in 2018.