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Investors traded $4.9 trillion of emerging markets debt in 2018

Dion Rabouin, author of Markets

Photo: Bryan R. Smith/AFP/Getty Images

Investors pulled back slightly on emerging markets debt last year, with trading volumes falling just 0.4% to $4.88 trillion, according to a new report from trade association EMTA.

Why it matters: Despite the Fed raising rates 4 times and the U.S. dollar rising — both are seen as very negative for EM bonds — investors bought emerging market debt at roughly the same level as 2017 when the asset class significantly outperformed U.S. debt.

Context: EM debt had a rough 2018, with the JPMorgan EM global bond index delivering -5% returns and a number of major EM currencies falling in value against the dollar, delivering a double whammy to local currency bondholders.

  • EM equities were hard hit, with the MSCI emerging market stock index down 15%.

Yes, but: Trading volumes fell to their lowest since 2015, which was the lowest they had been since 2009. EM debt had picked up significant momentum going into 2016, reaching nearly $5.2 trillion, but has pulled back since.

  • Investors also dramatically increased the volume of insurance trading on emerging market debt, trading 40% more credit default swaps last year than they did in 2017, EMTA's data showed.
  • CDS trade volume rose to $1.8 trillion as worries increased over the health of Turkey and Argentina's economies, as well as elections in countries such as Brazil and Mexico.

Go deeper: Emerging markets are hot again after a rocky 2018

Go deeper

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Kellyanne Conway addresses the 2020 Republican National Convention. Photo: Nicholas Kamm/AFP via Getty Images

Kellyanne Conway has seen power exercised as a pollster, campaign manager and senior counselor to President Trump. Now that his term in office has concluded, she shared her thoughts with Axios.

Why it matters: If there's a currency in this town, it's power, so we've asked several former Washington power brokers to share their best advice as a new administration and new Congress settle in.

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GOP holdouts press on with plans to crush Cheney

Screenshot of emails to a member of Congress from individuals who signed an Americans for Limited Government petition against Rep. Liz Cheney. Photo obtained by Axios

Pro-Trump holdouts in the House are forging ahead with an uphill campaign to oust Rep. Liz Cheney as head of the chamber's Republican caucus even though Minority Leader Kevin McCarthy told them to back down.

Why it matters: What happens next will be a test of McCarthy's party control and the sincerity of his opposition to the movement. Cheney (R-Wyo.) is seen as a potential leadership rival to the California Republican.

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Lachlan Markay
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Democrats aim to punish House GOP for Capitol riot

Speaker Nancy Pelosi passes through a newly installed metal detector at the House floor entrance Thursday. Photo: Drew Angerer/Getty Images

House Democrats plan to take advantage of corporate efforts to cut funding for Republicans who opposed certifying the 2020 election results, with a plan to target vulnerable members in the pivotal 2022 midterms for their role in the Jan. 6 violence.

Why it matters: It's unclear whether the Democrats' strategy will manifest itself in ads or earned media in the targeted races or just be a stunt to raise money for themselves. But the Capitol violence will be central to the party's messaging as it seeks to maintain its narrow majorities in Congress.

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