Investment insights from Capital Group
EM inflation has risen by less than US inflation
Core inflation (year-on-year %)
As at 30 April 2022. EM inflation is weighted by the JPMorgan GBI-EM Global Diversified index weights. US inflation is based on CPI Urban Consumers less food and energy index. Core inflation is the change in prices of goods and services, except for those from the food and energy sectors. Source: Bloomberg
Source: Bloomberg
EM real yield differential rising
EM real yields minus US real yields
Past results are not a guarantee of future results.
As at 26 April 2022. EM yields calculated using JPMorgan Government Bond Index-Emerging Markets Broad Indices. US yield is the Bloomberg generic 5-year index. Inflation is core CPI for the individual countries. Sources: Bloomberg and Capital Group calculations
Real yields are mostly positive across EM
EM real yields
As at 26 April 2022. ZA = South Africa, ID = Indonesia, CO = Colombia, PE = Peru, BZ = Brazil, MY = Malaysia, MX = Mexico, CN = China, RO = Romania, TH = Thailand, UY = Uruguay, PH = Philippines, DR = Dominican Republic, PL = Poland, CL = Chile, HU = Hungary, CZ = Czech Republic, US = United States, DE = Germany. Source: Bloomberg
1. Data as at 6 March 2022. CPI: consumer price index. Inflation basket refers to a set of consumer products and services whose price is evaluated on a regular basis to track inflation. Source: Morgan Stanley
2. Quantitative easing is when central banks make large scale purchases of financial assets to increase money supply, which helps lower interest rates and therefore stimulate economic growth.
3. A real interest rate is adjusted to remove the effects of inflation and gives the real rate of a bond or loan. A nominal interest rate refers to the interest rate before taking inflation into account.
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Past results are not predictive of results in future periods. It is not possible to invest directly in an index, which is unmanaged. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.
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