Should Emerging Markets Debt Investors Be Afraid of the Fed Hiking Cycle?

The U.S. Federal Reserve (Fed) has begun raising rates, spurring concerns about the impact on fixed-income returns. Should emerging markets (EM) debt investors be concerned, or could this be a buying opportunity? In this paper, we examine the previous tightening cycles that occurred during the life of this asset class to gauge the potential impact of the rate hikes on EM sovereign debt returns over the next 12 months and beyond.