Global bond flows compass Bright spots in Asia

Research evidence excerpt

Global bond flows compass Bright spots in Asia

Fixed Income ● Rates

3 July 2026

Emerging Markets (EM): We continue to see outflows from the wider EM local-currency debt

market. For June, outflows amounted to USD8.3bn, after inflows of USD13.9bn in May. Since the

Middle East conflict began, we have seen cumulative outflows of USD29bn. Lower oil prices

have eased the imminent pressure on inflation. However, price pressures go well beyond energy,

to supply chains and food prices, it might therefore be premature to expect a broad-based

improvement in the global EM flow picture. The broader US dollar strength could complicate the

picture further, as higher US rates alongside a stronger dollar could increase the beta of EM

portfolio flows to US moves, and compress the relative return of EM bonds vs the US.

Higher frequency flow data in table 1 shows that, over the latest reported week in June, non-

resident investors net purchased USD1.8bn of Korean Treasury Bonds in the secondary

market. Government debt inflows were also seen for Indonesia (USD563m) and India

(USD2.2bn). Foreign bond holdings, however, declined in Mexico (USD16bn) and the

Philippines (USD23m, includes Corp).

In the following text, we review the latest reported flow data and key developments for selected

bond markets.

Tax exemption of interest and capital gains tax for foreign institutional investors of

government securities leading to the highest inflows in two years: India announced the

exemption of interest and capital gains tax for foreign investors of government securities on 5

June. In addition, some long-tenor GSecs will also be designated under the Fully Accessible

Route (FAR). These measures improve the structural appeal of Indian bonds and are also