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EM Real Yield: China and CEE At Bottom Of The League

EMERGING MARKETS
  • With China PPI soaring to 6.8% in April (above 6.5% exp.), China currently offers the lowest 10Y real yield among the EM market (we use PPI instead of CPI for China as it shows stronger relationship with 10Y yield over time).
  • This morning, we saw that both Czech and Hungary CPI rose more than expected in April to 3.1% and 5.1% YoY, respectively. After China, the CEE region offers the lowest 10Y real yields when we adjust by headline inflation, Poland at -2.5%, followed by Hungary at -2.3% and then Czech R. At -1.3%.
  • South Africa still remains at the top of the League, currently offering a 10Y real yield of 5.7%.
  • The chart below ranks the 10Y real yields among the most liquid EM economies, adjusted by headline CPI.

Source: Bloomberg/MNI

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