Emerging Markets Emerge as Bond Investors Flee Developed Economies

Emerging-market bonds have defied the recent selloff in big economies' debt, offering investors a relatively stable and lucrative option. As energy costs and fiscal jitters push up rate expectations in the US, Europe, and Japan, their government bonds take a hit.

However, many emerging markets have dodged the worst of the selloff due to tamer inflation, already tight policy, and healthier public finances in some countries.

Pierre-Yves Bareau, chief investment officer at JPMorgan Asset Management, notes that 'the recent global bond rout makes EMs more attractive as they act as an income diversifier.'

According to JPMorgan, average inflation in developing economies sits near 3.8%, roughly one-third of the 2022 surge.