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EM Sovereign Shorter Tenor Bonds Said to Provide Cushion Against Tariff Risks
February 27, 2025
EM Asian sovereign bonds with shorter tenors are said to be gaining appeal amid tariff risks, according to some analysts. As per a Bloomberg analysis, the rolling 30-day correlation between short-term bonds in five Asian nations vs. the 2Y US Treasury yield is seen to be weaker than that between longer-term bonds of these nations vs. the 10Y US Treasury yield. Bloomberg notes that shorter-dated bonds might be more resilient to tariff volatility and fluctuations in US interest rates. Rajeev De Mello of Gama Asset Management, says that the focus has increased on shorter-to-mid maturity bonds or interest-rate swaps as emerging Asian economies shift toward easing monetary policies. For instance, Thailand and South Korea have recently cut rates, with other regional central banks also having indicated a potential shift towards easing policy.
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