Global sovereign yields rose over the week as markets adjusted to a more hawkish policy outlook, particularly in the US. Fed speakers pushed back against expectations of swift easing, prompting investors to scale back the number of cuts priced for 2026. This repricing lifted Treasury yields across the curve: the 2y rose 4bps to 3.61% and the 10y increased 5bps to 4.15%. Long-end pressure was amplified by a weaker 30y auction, where issuance cleared 1bp above pre-sale levels, contributing to a 5bp rise in 30y yields. Breakevens were broadly stable, while real yields climbed, consistent with tighter policy expectations.
Euro-area yields also drifted higher, with Bunds up 5–6bps across the curve and similar moves in France, Italy, and Spain. The UK saw the largest adjustment, with 10y gilts surging 11bps on the week, reflecting volatility after the government reversed planned income-tax increases, raising uncertainty ahead of the 26 November budget. Elsewhere, Swiss and Japanese yields also edged higher.
Bond performance mirrored the rate move: US Treasury ETFs delivered negative returns, ranging from -0.2% in the 3–7y bucket to –0.78% in 20y+. EUR government bond ETFs also declined slightly.
Emerging market
Emerging market (EM) Sovereign $ bonds declined last week, once again pressured by higher US Treasury yields. Among the EM investment grade sovereigns, Chile and Peru were the top performers.
The outcome of Sunday’s first-round presidential vote in Chile strengthened the peso and supported investor sentiment, as it raises the prospect of a more market-friendly policy direction.
Peru’s economy continues to show resilience, supported by strong exports. The country is the world’s second-largest copper exporter, the top exporter of zinc, and a major supplier of gold and silver. Peru has one of the strongest foreign exchange reserves in EMs, covering three times of short-term external liabilities. The forthcoming presidential elections are expected to restore political stability and potentially lift GDP growth into 2026.
In Colombia, analysts widely expect a conservative victory in May Presidential vote, which could bring policy to lower fiscal deficit.
South Africa was upgraded by S&P to BB+ with a Positive outlook, supported by a third consecutive year of primary fiscal surpluses. With improving budget discipline and stronger revenue performance, the Country is positioned as a potential rising star among emerging markets.
On the U.S. tariff front, the Trump administration removed tariffs on more than 250 food products under its global reciprocal-tariff regime, with India among the key beneficiaries. It also lowered tariffs on selected agricultural imports from Latin America, including coffee, bananas, and beef from Brazil and Argentina, ahead of next week’s Thanksgiving holiday.
In local markets, EM currencies outperformed once again. J.P. Morgan EM Local Currency Bond ETF gained +0.4%.
The EM Sovereign USD Bond ETF slipped 0.1%, while EM USD corporates remained broadly flat and Asian high yield rebounded 0.4%.
The upcoming election cycle in Latin America certainly remains an important catalyst to watch. Nevertheless, the outsized market swings seen during the 2021-2022 cycle are unlikely to repeat. The U.S. dollar is significantly weaker today, and Latin American economies now operate from a far more resilient macro backdrop, supported by stronger external balances and improved inflation dynamics.
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