Philip MacNicholas, Asian sovereignty strategist at Singapore’s Robeco, said:
“The increasing volatility of the Treasury and US policies should infuse higher term premiums and reduce the appeal of the dollar, as they play,” he said. The term premium is when bond investors require compensation to take the risk that interest rates fluctuate over the life of security.
New local currency bonds could be further boosted as weak dollars strengthen the performance of developing countries. Bloomberg’s Dollar Spot Index fell nearly 4% in April, heading towards its fourth monthly decline.
“We’re looking forward to seeing you in the future,” said Mike Riddell, Fixed Income Portfolio Manager at Fidelity International in London. “Coupled with the long US dollar positioning, the rewind of the noble USD valuation will be a major yearly tailwind for emerging markets.”
