EMD outlook for 2023: local currency yields offer protection in volatile conditions

Also Interesting

• Apartment Markets Remain Robust Despite Roaring Home Purchases
• Evaluating oil company governance at the dawn of the electric transport age
• Q&A Trump, trade and inflation – Should we worry?

Key takeaways

• Global factors weighing on emerging market debt in 2022 look likely to continue in 2023, but high starting yields within EM local currency debt could help offset subsequent price volatility, while negative outcomes appear to be priced in within some areas of hard currency debt.
• Local currency bonds: we prefer to extend duration in Latin American countries that have hiked interest rates early, and we are starting to see opportunities within Europe.
• Hard currency bonds: we favour a meaningful positive carry through idiosyncratic, high yielding sovereign and select corporate issuers.