Growth is so slow in emerging markets that central bankers are tolerating faster inflation to stimulate their economies, driving investors to debt linked to consumer prices at the fastest pace in two years.
Emerging-market stocks rose for the first time in three days as an unexpected increase in Japan’s asset-purchase program boosted metals and fueled speculation that central banks will revive global growth.
Just three months after the biggest developing economies sold dollars to support their currencies, policy makers from Colombia to China are moving to weaken exchange rates and revive exports as the International Monetary Fund forecasts the slowest trade growth in three years.
Mexico’s peso bonds will likely end a rally that drove yields to a record low after the central bank reports that inflation missed its target last month, said Kieran Curtis , a fund manager at Aviva Investors.
Eastern Europe, whose banks are the world’s most dependent on foreign funding, may benefit in the long term from a pullback by western lenders as economic imbalances abate to leave a sturdier platform for growth.
Yields on Russian government bonds are falling to the lowest level in almost four months compared with developing nations in Europe as rallying oil prices boost confidence in the world’s largest energy exporter.
Turkish bond yields are rising faster than the rest of emerging-market debt and still can’t entice the world’s biggest investors, who say policy makers won’t curb inflation unless they take steps to slow growth.