The U.S., which plunged into a recession five years ago as spiraling home values prompted a credit seizure, will probably grow by 2.7 percent next year and 3 percent in 2015 from 1.6 percent this year, a Bloomberg survey of 73 economists shows.
With the Fed expected to start decreasing its bond-buying program at its Sept. 17-18 meeting, borrowing costs have climbed for bonds globally. Yields on 10-year Treasuries reached 2.99 percent on Sept. 5, the highest since July 2011.
The underperformance of emerging-market debt relative to U.S. corporate notes has been sustained for one of the longest periods in history, the JPMorgan analysts wrote in their report.
China Opportunity
“When underperformance causes a selloff in the market and liquidity worsens as a result, you have a huge gapping in risk valuation,” said Edwin Chan, the head of credit research at UBS AG in Hong Kong.
While the rout may eventually present a buying opportunity -- Mark McCombe, BlackRock’s Asia-Pacific chairman, talking to Bloomberg TV today, said China’s economy is stabilizing and he’s “pretty positive on it” -- losses for emerging markets debt have the potential to accelerate, BlackRock’s Rosenberg said.
“Emerging markets risk has gone up more than the risk associated with U.S. corporates,” Rosenberg said. “We’re not yet ready to say it’s time to pile into emerging markets.”