Emerging-market investors reduce exposure to riskiest bonds amid selloff

emerging-market investors: Emerging-market investors are asset managers, institutions, and other market participants allocating capital to developing-country bonds and related assets. In the reported development, they are reducing exposure to the riskiest emerging-market debt as higher US yields and stress in global credit markets make dollar-denominated and lower-quality bonds less attractive. Global rates: A broad global bond selloff has been driven by expectations of tighter US monetary policy, persistent inflation concerns, and elevated long-term Treasury yields. Risk appetite: Recent market commentary indicates that investors are favoring local-currency emerging-market bonds over dollar debt as rising Treasury yields reduce the appeal of taking additional emerging-market credit risk. Market transmission: Higher US yields, a stronger dollar, and greater foreign-exchange volatility are pressuring emerging-market carry trades and increasing the risk of capital outflows from developing-country assets.