Emerging Market Assets Suffer Sharpest Decline Since Iran Conflict

The US 10-Year Treasury Yield has surged past 5.2%, reaching its highest level in nearly two decades, putting pressure on emerging market assets.

Emerging market bonds have fallen approximately 2.1% this month, making it their worst monthly performance since the Iran conflict outbreak. The BlackRock iShares J.P. Morgan USD Emerging Markets Bond ETF recorded weekly outflows of $610 million (approximately NT$19 billion) last week, its largest capital exodus in six months.

The selloff extended into Monday across emerging market equities and currencies, with the MSCI Emerging Markets Index dropping 1.1% and virtually all developing-nation currencies weakening against the US dollar. Asian technology stocks were the primary drag, led by South Korea's Samsung Electronics and SK Hynix.

Martin Castro Alves, chief strategist at Brazilian investment firm Avenue, stated that rising US borrowing costs are pushing yields higher across the entire curve, combined with rising oil prices and resurgent inflation concerns. This is exerting heavy pressure on emerging market assets.