These emerging markets are favored to get 'a wall of money' from carry trades
Emerging markets could attract more capital as Treasury bond buyback plans weaken the dollar and support carry trades, analysts say.
TL;DR
- U.S. Treasury's plan to double buybacks of longer-dated debt aims to ease pressure on yields and has weakened the dollar.
- Emerging markets are expected to attract a 'wall of money' as investors seek opportunities and support for carry trades.
- The reduced risk for carry trades, a major concern for investors, has been diminished by the U.S. government's actions.
- Global emerging market bond funds saw significant inflows, indicating increased investor interest.
- Brazil and Turkey are highlighted as favored emerging markets due to high nominal and inflation-adjusted yields.
- Colombia has been popular for carry trades, with its currency and stock index showing strong year-to-date gains.
- Asian currencies are expected to underperform due to lower implied yields compared to other emerging markets.