The sell-off in Asian emerging market debt started early on May 23, when most people in the region were still asleep. On the other side of the planet, US Federal Reserve chairman Ben Bernanke hinted that the Fed would reduce its vast purchases of US Treasuries, signalling an end to an era of ultra-low interest rates.
During the aftermath of the Lehman bankruptcy and the global financial crisis of 2008, the Fed kept rates low to stave off deflation. As a result, investors have been allocating money to emerging markets in search of higher growth and richer returns.
But Bernanke’s comments raised the possibility of a shift...
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