U.S. Investment in global bonds: As the fed pushes, some EMEs pull

John Burger, Rajeswari Sengupta, Francis Warnock and Veronica C. Wrnock
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Veronica C. Wrnock: Darden Business School, University of Virginia

Indira Gandhi Institute of Development Research, Mumbai Working Papers from Indira Gandhi Institute of Development Research, Mumbai, India

Abstract: We analyze reallocations within the international bond portfolios of US investors. The most striking empirical observation is a steady increase in US investors' allocations toward emerging market local currency bonds, unabated by the global financial crisis and accelerating in the post crisis period. Part of te increase in EME allocations is associated with global push factors such as low US long term interest rates and unconventional monetary policy as well as subdued risk aversion/expected volatility. But also evident is investor differentiation among EMEs, with the largest reallocations going to those EMEs with strong macroeconomic fundamentals such as less volatile inflation and more positive current account balances.

Keywords: International investments; Local currency bonds; Portfolio reallocations; Macroeconomic fundamentals; Emerging economies (search for similar items in EconPapers)
JEL-codes: F3 F4 F6 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2015-01
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Citations: View citations in EconPapers (22)

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Related works:
Journal Article: US investment in global bonds: as the Fed pushes, some EMEs pull (2015)
Working Paper: U.S. Investment in Global Bonds: As the Fed Pushes, Some EMEs Pull (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ind:igiwpp:2015-002

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