Treasury Yields’ Grip on Emerging Markets Keeps Traders on Guard

(Bloomberg) — Slowing economic recovery amid a resurgent pandemic is leaving emerging-market currencies vulnerable to a selloff if Treasury yields rise again.

While the influence of U.S. borrowing costs on developing-nation currencies has waned in recent months, it may return to prominence for riskier assets as the cushioning effects from China’s growth rebound and low inflation weaken, according to money managers including Fidelity International and Credit Agricole CIB.

“A very sharp,…


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