Haymaker Daily

On the Bond Market's Emerging Winner

Hello, Subscribers:

It’s our belief that most Western investors are unaware of how dramatically emerging market (EM) bonds issued in local currencies (i.e., not dollar-denominated) have outperformed U.S. Treasuries (USTs) over the last five years. That half-decade has been one of the worst for bonds in modern market history.

As displayed below, long-term USTs, as represented by the ETF TLT, have lost over 7% per year since early 2021. Intermediate-term maturity USTs, as proxied by the ETF IEF, have fared much better but still incurred a negative return of nearly 1 ½% per year.