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Investors turn selective in emerging-market inflation-linked local debt
An $886 billion slice of the market has outperformed, with one inflation-linked EM index returning 11.1% in 2026 through Friday versus 1.6% for a broader local-debt benchmark.
Emerging-market investors are getting more selective in inflation-linked local-currency government bonds as inflation worries persist and currencies swing, according to LiveMint Markets, citing Bloomberg.
The inflation-linked EM local-debt index has delivered an 11.1% return in 2026 through Friday, after its best year in over a decade. That compares with a 1.6% gain for a broader index of local debt and a 0.2% decline for the Bloomberg Global Aggregate Bond Index.
Currency appreciation has helped drive the strong results, but investors are weighing renewed price pressures, higher energy costs, and central banks taking increasingly different paths. Traders have particularly benefited from Brazil and Mexico, the two largest markets, and are looking toward “linkers” in countries such as Chile, Poland, and Argentina.
The article highlights that inflation has accelerated more than expected in Argentina, India, South Africa, and Romania, while staying more sticky in Brazil and Colombia. It also notes Turkey’s central bank revised its year-end inflation projection to 28% from 26%, and that BlackRock’s Benjamin Souza cautioned that not all inflation-linked bonds offer the same risk-reward profile.