EMLC: Reiterating My Cautious Stance As The Dollar Strengthens

Summary Emerging market local currency debt has outperformed some other types of bond funds recently but now faces mounting headwinds. Favorable currency tailwinds are fading as the U.S. dollar has started to strengthen. Fed rate hikes are likely to support a stronger dollar. VanEck JP Morgan EM Local Currency Bond ETF's intermediate duration exposes it to some downside price risk as rates rise. I maintain a bearish stance on EMLC, viewing it as relatively poorly positioned for the current FX and interest rate environment. Looking for a helping hand in the market? Members of Ian's Insider Corner get exclusive ideas and guidance to navigate any climate. Learn More » Bjoern Wylezich/iStock via Getty Images It's been a rocky time in the bond market. We've seen yields on U.S. government bonds shoot to new multi-decade highs in recent weeks. The macroeconomic landscape is challenging for bonds, as credit traders fear inflation, war, an energy shock, and This article was written by Ian Bezek 23.86K Followers Follow Ian Bezek is a former hedge fund analyst at Kerrisdale Capital. He has spent the decade living in Latin America, doing the boots-on-the ground research for investors interested in markets such as Mexico, Colombia, and Chile. He also specializes in high-quality compounders and growth stocks at reasonable prices in the US and other developed markets. Ian leads the investing group Ian's Insider Corner. Features of the group include: the Weekend Digest which covers everything from new ideas to updates on current holdings and macro analysis, trade alerts, an active chat room, and direct access to Ian. Learn More. Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.