Rising oil prices drive up US Treasury yields, putting pressure on emerging market assets

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智通财经2026/09/15 09:51

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On Tuesday, emerging market currencies generally fell as the US dollar strengthened. Previously, a rise in oil prices pushed US benchmark Treasury yields to near 20-year highs, and emerging market equities fell in tandem.
The index tracking emerging market currencies dropped 0.4%, possibly recording declines for the fourth consecutive trading day. The US dollar index strengthened, hovering near a two-week high.
The Korean won fell 1.2%, and the Indian rupee dropped 0.4%, reaching their weakest levels in over a month. Rising US Treasury yields boost the appeal of the dollar and increase the debt servicing costs for emerging markets.
The market is also focusing on the US Federal Reserve’s two-day policy meeting beginning later in the day, with traders pricing in about a 94.5% probability of a 25-basis-point rate hike.
According to an investment director, if the US raises interest rates, a stronger dollar often drains liquidity from emerging markets, as capital is attracted back to the US and dollar assets.
Oil prices rose nearly 2% as Saudi Arabia's energy infrastructure was attacked, causing east-west pipelines to halt operation. Persistent supply concerns further dampened risk appetite.
Emerging market stock markets mostly fell, with the related indices down 1%, hitting a three-week low. South Korea’s stock market continued its decline, dropping 0.9%.
Indian stock markets fell by 0.7% and 0.6%. Retail inflation in August accelerated further, with price pressures spreading from food and transportation, reinforcing expectations that the central bank will raise rates next month.
Most emerging European stock markets fell. Warsaw’s stock market dropped 1.2%; the Hungarian forint fell 1.2%. A Polish central bank official stated that rates may be maintained until the end of the year, but if the commodity shock has a lasting impact on inflation, a rate hike in the first quarter of 2027 cannot be ruled out.
In frontier markets, the World Bank President said he would meet with the President of Senegal to discuss the country’s plans to seek debt restructuring under the G20 common framework.

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Rising oil prices drive up US Treasury yields, putting pressure on emerging market assets

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