EM Bond Funds Draw $967 Million as US Treasury Buybacks Weaken Dollar

1 articles · Updated · CNBC · Sep 1

$967 million flowed into global emerging-market bond funds in the week to Wednesday, up about 15% from the prior week even as overall bond-fund inflows slowed.
U.S. Treasury buybacks of longer-dated debt—doubled last month by Treasury Secretary Scott Bessent—helped weaken the dollar and cap long-term yields, improving conditions for dollar-funded carry trades into higher-yielding markets.
EM and high-yielding developed currencies have already benefited: the South Korean won gained 2.83% against the dollar since the announcement, while the Brazilian real rose 0.64% and the South African rand 0.59%.
Strategists highlighted Brazil and Turkey for high real yields, while Colombia has also been popular; Asian currencies are seen lagging because their yields remain relatively low.
Analysts say the backdrop of low volatility and easing inflation still favors carry trades, and some expect a broader 'wall of money' into emerging markets after earlier war-driven outflows.