BofA GEMs Viewpoint: Not all UST sell-offs are equal for EM Sov spreads — one hike from the stress zone
Key takeaways Real yields, not Treasury yields, are the risk - We analyse 33 Fed-driven rates shocks since 2013 One hike away from historical US EM stress (This means US 2yr repriced by 50-60bp within a 30d window+ strong $ & lower S&P) EMBIG yield >8% signals outflows, 8.8% marks capitulation - Until EMBIG yields Fed