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While it may look unappealing right now, two factors make emerging market debt worth considering. First, while slight compared with their long-run average, spreads remain reasonable next to their more recent history, in this case the more relevant benchmark. Second, while yields have shrunk across the fixed-income universe, implied volatility in the U.S. Treasury market has also faded. To the extent that this low-volatility environment persists, Sharpe ratios in various credit markets may remain interesting even with prosaic headline yields.
