US bond yields have risen sharply, and the yield difference between US bonds and Asian emerging market bonds is approaching historic highs, increasing the risk of capital outflows from the region. Long-term bonds in emerging markets in Asia are particularly affected by rising US debt, which may trigger the withdrawal of foreign capital or a decline in the scale of net inflows of foreign capital. Widening interest spreads, compounded by potential capital outflows, may have multiple impacts, including putting pressure on the local currency and driving up financing costs.

US bond yields have risen sharply, and the yield difference between US bonds and Asian emerging market bonds is approaching historic highs, increasing the risk of capital outflows from the region. Long-term bonds in emerging markets in Asia are particularly affected by rising US debt, which may trigger the withdrawal of foreign capital or a decline in the scale of net inflows of foreign capital. Widening interest spreads, compounded by potential capital outflows, may have multiple impacts, including putting pressure on the local currency and driving up financing costs.