The US Treasury yield curve has inverted. Strategists examine what this means for Emerging Market (EM) currencies on historic sensitivities.

What US yield curve inversion means EM FX?

“Unsurprisingly the USD strengthens as the yield curve inverts. HUF, SGD, KRW, BRL and MXN are the most sensitive EM currencies vs. USD as this happens. If we are correct and the US curve inverts further, pressure on these currencies will likely intensify.”

“On the other end of the spectrum are INR, MYR and TRY, with INR the only EM currency that strengthens as the UST yield curve inverts.”