U.S. Interest Rates and Emerging Market Bond Yield Spreads: A Changing Relationship?
Posted: 6 Apr 2013
Date Written: March 4, 2013
The empirical evidence on the impact of international interest rates on emerging market (EM) bond spreads is mixed. In this article, we closely examine the 2000–2009 period and find a negative relationship between U.S. interest rates and EM bond spreads. We argue that the relationship between U.S. short rates and EM bond spreads is unstable and can change depending on how other “push” and “pull” factors, such as investors’ appetite for risk and emerging markets’ economic fundamentals, interact.
Keywords: bond spreads, emerging markets, push and pull factors, interest rates, spreads, US
JEL Classification: G1, G15
Suggested Citation: Suggested Citation