Sovereign bonds from India and Indonesia are seen better placed to weather the impact of rising U.S. yields thanks to their wider rate differential over Treasuries.
Bonds from the two countries are already leading gains in emerging Asia this quarter, offering 3%-5% returns to dollar-based investors. In comparison, lower-yielding bonds from Thailand and South Korea have handed losses of between 4.5-5%.
The Treasury rout spurred by the Federal Reserve’s indication that it may start tapering bond purchases in November has intensified amid challenges faced by President Joe Biden’s administration in raising the debt ceiling. The wave of global bond selloff that ensued has weighed on Asian bonds, with hawkish comments from U.K. and Norway’s central bank adding to jitters.
Indonesia and India’s bonds have outperformed due to…
