EM Currencies Post Biggest Quarterly Gain in 1 Year as Treasuries Diverge Most Since 2022
Updated
Updated · Bloomberg · Aug 25
EM Currencies Post Biggest Quarterly Gain in 1 Year as Treasuries Diverge Most Since 2022
3 articles · Updated · Bloomberg · Aug 25
Summary
MSCI’s emerging-market currency benchmark is on track for its biggest quarterly gain in more than a year even as US Treasuries head for a quarterly loss, marking their most negative correlation since the first quarter of 2022.
Higher US yields are no longer lifting the dollar as they once did, weakening the usual pressure that rising Treasury yields place on emerging-market currencies.
A Bloomberg gauge of Treasuries is set for a quarterly decline as investors sell longer-dated bonds amid concern over the trajectory of US government debt.
That break in the usual Treasury-dollar link is freeing EM currencies from a key headwind and underscores a broader shift in how markets are pricing US fiscal risk.