Emerging market local-currency bonds are being tipped to beat their dollar-denominated peers despite offering lower yields than even US Treasuries.

The securities have had the best start to the year since 2022 against their dollar rivals, as global trade turmoil boosts expectations for interest-rate cuts in developing nations and cools inflation by pushing down oil prices. Dollar bonds meanwhile have underperformed as US President Donald Trump’s tariff threats weigh on the greenback.

“We have a strong preference for EM local debt” over emerging dollar bonds due to the weak dollar and the prospect that EM central banks will have more room to lower policy rates, said Jon Harrison, managing director for EM macro strategy at GlobalData TS Lombard in London.

“The slowing US economy, with a growing chance of recession, is bad for global growth, which is likely to further incentivize EM central banks to cut rates,” he said.

Emerging-market local-currency bonds have returned 3.2% this year, while their dollar-denominated peers have gained just 0.7%, according to Bloomberg indexes.

The outperformance of local-currency debt has led to an unusual situation where the historically riskier bonds are trading at lower yields than those denominated in the dollar — traditionally the world’s main haven asset. The average yield on the local-currency index has dropped to 4.03%, compared with 7.1% for the dollar-denominated gauge and 4.12% for US Treasuries.

One of the major drivers of local-currency bonds in recent weeks has been increasing expectations that central banks will ease monetary policy due to the turmoil set off by Trump’s announcement of “reciprocal tariffs” on April 2.

An index of one-year interest-rate swaps from 18 emerging economies has dropped by around 15 basis points in April alone, heading for the largest monthly decline since September, based on data compiled by Bloomberg. 

‘Heightened volatility’

“Among the larger markets, we prefer the local-currency side” as that gives us greater means to express our views on currencies, monetary policy, duration and yield curves, said Philip McNicholas, an Asia sovereign strategist at Robeco in Singapore. 

“The heightened volatility in Treasuries and US policy should be imbuing a higher term premium — as is playing out — and diminishing the allure of the dollar,” he said. The term premium is the compensation bond investors demand to bear the risk that interest rates will fluctuate over the life of the security.

Emerging local-currency bonds may get a further boost as the weak dollar bolsters the performance of its developing-nation counterparts. Bloomberg’s dollar spot index has fallen almost 4% in April, heading for a fourth monthly decline.

“The US dollar still looks very expensive following a decade long US dollar bull market,” said Mike Riddell, a fixed-income portfolio manager at Fidelity International in London. “An unwind of lofty USD valuations, coupled with heavy long USD positioning, would likely be the main multi-year tailwinds for emerging markets.”

Lower issuance

The worsening outlook for the dollar is making some bond issuers more cautious about sales of debt denominated in the US currency.

Issuance of dollar bonds in emerging markets excluding China, has fallen 36% so far in April compared with the same period a year ago, to just $5.1 billion, based on data compiled by Bloomberg.

Goldman Sachs Group Inc. is among those saying EM local-currency bonds should keep outpacing their peers.

“In the face of recession fears, we think that EM local rates would be poised to outperform other EM assets,” Goldman Sachs analysts including Andrew Tilton and Kamakshya Trivedi wrote in a research note published Thursday. 

What to watch

• Chinese banks will announce their loan prime rates on Monday, while Bank Indonesia will make a rate decision on Wednesday
• Malaysia, Singapore and South Africa will publish inflation data, with further signs of disinflation to support wage-cut bets
• South Korea will release first-quarter advance GDP, with investors looking for any impact on the economy of the global tariff uncertainty

This story was originally featured on Fortune.com

Ukraine’s President Volodymyr Zelenskiy accused Kremlin forces of violating a 30-hour Easter Sunday truce declared by Russian President Vladimir Putin, and reiterated his proposal to extend the ceasefire for another month. 

Russia’s defense ministry responded that Ukraine wasn’t adhering to the short-term truce, and had shelled Russian positions hundreds of times since Saturday night. Neither side’s claims could be verified. 

Posting on social media, Zelenskiy said Russia was trying to create “the general impression of a ceasefire” and generating “favorable PR coverage.”

He cited 59 cases of shelling and five assault actions by Russian units in various frontline areas on Sunday morning, based on an early-morning report from Armed Forces commander-in-chief Oleksandr Syrskyi. In an update, Zelenskiy said there’d been an increase in shelling and the use of kamikaze drones in the late-morning hours. 

The most active operations were in the vicinity of Pokrovsk and Siversk in Ukraine’s east, where Kremlin forces continue to use heavy weaponry, he said. 

A new report by Commander-in-Chief Syrskyi on the frontline as of 12:00 p.m. on Easter Day.

Despite Ukraine declaring a symmetrical approach to Russian actions, an increase in Russian shelling and the use of kamikaze drones has been observed since 10:00 a.m. – with FPV drone…

— Volodymyr Zelenskyy / Володимир Зеленський (@ZelenskyyUa) April 20, 2025

Still, neither side reported any of the kind of missile attacks or large-scale drone swarms that have taken place regularly in the war, which is now well into its fourth year. 

“Our soldiers everywhere respond in the way the enemy deserves in specific combat circumstances,” Zelenskiy said in his post. “Ukraine will continue to mirror Russian actions.”   

Putin ordered the pause in hostilities, lasting little more than a day, during a televised meeting on Saturday with the military’s chief of the general staff, Valery Gerasimov. The truce is due to end at midnight Moscow time.  

Zelenskiy dismissed the pronouncement as “yet another attempt by Putin to play with human lives.” Even as the Russian leader spoke, air raid alerts were spreading across Ukraine, with attack drones detected in the skies, he said on X. 

Read more: Trump Says US to ‘Take a Pass’ If Russia or Ukraine Balk on Deal

“If a complete ceasefire truly takes hold, Ukraine proposes extending it beyond the Easter day of April 20,” he wrote. “That is what will reveal Russia’s true intentions — because 30 hours is enough to make headlines, but not for genuine confidence-building measures. Thirty days could give peace a chance.” 

Putin’s move came a day after the US warned that it may soon abandon efforts led by President Donald Trump to end the war in Ukraine if there isn’t meaningful progress toward a ceasefire.

Trump, who on the campaign trail vowed that he could quickly end the war, has expressed increasing frustration with the pace of negotiations with Putin. Still, he’s shown determination to get a deal done within 100 days of his Jan. 20 inauguration, which falls on April 30.

Read more: US Is Open to Recognizing Crimea as Russian in Ukraine Deal 

The US is open to recognizing Crimea – which Russia has occupied since 2014 — as part of Russia under a peace agreement with Ukraine, Bloomberg reported on Friday, citing people familiar with the matter. A US framework presented to allies on Thursday included easing sanctions on Moscow in the event of a lasting ceasefire. 

Ukrainian Foreign Minister Andrii Sybiha on Saturday said his country has already agreed “unconditionally” to the US proposal for a “full interim ceasefire for 30 days.” In contrast, Russia has “imposed various conditions and increased terror against Ukraine, civilians, and civilian infrastructure throughout the country,” Sybiha said on X. 

Ukraine’s position remains clear and consistent: back in Jeddah on March 11, we agreed unconditionally to the U.S. proposal of a full interim ceasefire for 30 days.

Russia refused, and the Russian refusal to the United States has already lasted 39 days. Instead, the Moscow…

— Andrii Sybiha (@andrii_sybiha) April 19, 2025

Russia has tied its agreement to a cessation of hostilities to sanctions relief and a suspension of arms deliveries to Ukraine, among other things.  

The past few weeks have seen a pair of especially deadly Russian missile attacks on civilian targets in Ukraine, including on Kryvih Rih, Zelenskiy’s home town, and the northeastern city of Sumy. 

At the same time, Russian troops, which control about 20% of Ukraine, continue to inch forward on the battlefield. Moscow said Saturday it ejected Ukrainian forces from a village in the Russian region of Kursk; Gerasimov said Saturday that Russia has recovered 99.5% of territory that Kyiv’s troops at one point held in Kursk. 

Meanwhile, Russia and Ukraine each swapped 246 prisoners of war each on Saturday, and Russia also set free 31 wounded Ukrainian soldiers in return for 15 Russian troops needing urgent medical care, according to Russia’s defense ministry. The exchange, brokered by the United Arab Emirates, was the latest such deal that’s seen several thousand soldiers released. 

This story was originally featured on Fortune.com

• The Department of State could be in for a massive overhaul. A draft executive order obtained by The New York Times shows what would be one of the largest reorganizations of the agency since its founding in 1789. U.S. Secretary of State Marco Rubio denies there are changes in the works.

In President Donald Trump’s latest effort to overhaul federal government offices, he reportedly drafted an executive order that would drastically alter the State Department.

The executive order would eliminate nearly all of the State Department’s operations in Africa, shut down embassies, and cut offices at the agency’s headquarters that address climate change as well as refugee, democracy, and human rights issues, according to a 16-page draft order obtained by The New York Times. 

According to the document, this would be a “disciplined reorganization” of the agency to “streamline mission delivery” and cut “waste, fraud, and abuse.” If the executive order is enacted, this would mark one of the most significant reorganizations of the State Department since its 1789 inception, according to Bloomberg. The changes would need to be made by Oct. 1, the document shows.

U.S. Secretary of State Marco Rubio, however, claims there are no such plans in the works.

“This is fake news,” Rubio wrote in an X post on Sunday morning. “The ⁦@nytimes⁩ falls victim to another hoax.”

When asked for comment about the executive order draft, White House spokesperson Anna Kelly pointed Fortune to Rubio’s X post. 

The NYT last week had also reported the Trump administration could cut nearly 50% of the State Department’s funding next fiscal year, according to an internal document. 

Other changes included in the draft would require involvement from Congress and “no doubt be challenged by lawmakers,” according to the NYT, and could face lawsuits. 

“Now, instead of bending policy to the facts, Rubio’s State Department intends to censor facts—about the dictators Trump is supporting—to fit the policy,” former U.S. Representative Tom Malinowski wrote on X. “It’s embarrassing and illegal, but it won’t shield him from accountability.” Malinowski served as assistant secretary of state for democracy, human rights, and labor during the Obama administration.

According to documents obtained by the NYT, the following changes—and more that aren’t listed—could be made at the State Department:

• Lay off career diplomats and civil service employees
• End foreign service exam for aspiring diplomats
• Outline new hiring criteria
• Expand artificial intelligence use to help draft documents
• Eliminate regional bureaus
• Cut the bureau of African affairs
• Move Canada operations to a new North American affairs office
• Eliminate bureau overseeing democracy and human rights issues
• Narrow Fulbright scholarships
• End fellowship contract with Howard University 

Representatives for Rubio and the U.S. Department of State didn’t immediately respond to Fortune’s request for comment.

This story was originally featured on Fortune.com