From a bond market perspective, the US is in trouble. Yields are blowing out on the upside, with the ten-year bond at 5.24% and the thirty-year at 5.61%, versus 4.12% on the ten year and 4.83% on the thirty-year at the beginning of 2026. Secretary Bessent’s intervention is failing. This spike in yields has led to a move upwards in the USD; (DXY) has gone up 3.54% since September 16.2026, the time rates started to blow-out.
A strong dollar is not bad. But when it is a result of higher borrowing costs, it is a concern.
In times past, if US treasuries were going to be up more than 100 basis points, emerging markets would have cratered. Higher rates in the US would be a magnet for emerging market money to leave the emerging market for the US, leading to lower currencies and all sorts of problems. Not now. Now emerging markets can show proof that they have implemented fiscal reforms and boosted interest rates early to get ahead of inflation.
In short, it is surprising how out of sync with history some currencies have been. The Brazilian real has appreciated, and the Mexican peso has made a small move.
Another example is Colombia. In the past month, US yields on the ten-year have gone up .43%. Historically, a market like Colombia would have seen rates move a lot higher than US rates. But this time the difference in interest rate increases with the US is only 9 basis points (.43% US and .52% Colombia) this is astounding, almost unheard of in the history of emerging markets.
Yes, true to form, the Colombian peso has weakened in sync with US dollar strength, down 3.5% versus the US dollar. The real surprise is that Colombia did not have jack up rates to keep money to flow the outflow.
When you look at the fundamentals, less volatile yields make sense. First, the government has credibility after raising interest rates .25% in September to counter inflation running at about 6%. Second, economic numbers are coming in good; exports posted the strongest year-over-year growth since May driven by commodities, specifically metals and oil. Third, the latest PMI was strongest since October 2025.
If you look at Colombia’s economic metrics, they are good. The Current Account deficit is only 2.4% of GDP, and government debt to GDP is only 59%, meaning they do not have a huge need for money or financing. Inflation is running hot at 6.3%, but the Central Bank seems to be on it.
Colombia is holding its own in a tough time. Ok, it is not Mexico or Brazil, markets that have held up better than Colombia in the US dollar centric time. But it has still done better than in the past time, and surpassed expectations.
Colombia peso short-term paper from Etherfuse at 11-12% yield makes sense to hold.
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