The world’s largest listed hedge fund – Man Group yesterday (3) warned that emerging market debt is increasingly vulnerable, if the U.S. 10-year bond yield rises above 2%, may trigger a large outflow of funds.
Foreign media quoted the group’s emerging market debt portfolio manager Lisa Chua pointed out that the bond market is currently overvalued, taking into account the accelerating trend of Inflation, as well as the Federal Reserve in response to the Epidemic and to avoid the risk of potential failure in the process of economic overheating, developing countries are bound to be threatened by bonds. She warned that if the U.S. 10-year bond yield rises to 2%, it could lead to a large outflow of funds from strong currencies and emerging market debt.
She pointed out that in the case of a rapid rise in U.S. yields, strong currencies and emerging market debt will become very vulnerable, the current debt market is crowded and over-valued, and emerging market debt has limited buffering capacity, may not be able to absorb the continued rise in U.S. bond yields.
Last year, emerging market debt returns are ideal, since March last year to the end of the index rose 14%, but in January this year after a record high will fall back.
In fact, in addition to Man Group, BlackRock and Fidelity International also recently coincided that the wave of inflation means that emerging market debt will probably face the most severe challenges.
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