Next leg of emerging-bond rally about to start on rate cuts

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(iStock)
(iStock)

London - The bond rally across emerging markets may get fresh legs.

Pressure is growing on central banks in developing nations to cut interest rates more aggressively as inflation eases and the Federal Reserve takes a gradual approach to policy change. That’s reducing the need for the high borrowing costs that deter capital outflows and protect emerging-market currencies.

Looser monetary policy is a potential boon to already surging sovereign and corporate bonds in emerging markets, which in recent weeks revived a rally that sent both dollar-denominated and local-currency debt gauges to all-time highs.

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