Bonds from emerging Asian nations are set to lag global peers despite a rally in Treasuries.

That’s because a 30-day correlation of emerging Asia bonds to Treasuries show the two asset classes are detached, while the same gauge for Latin American bonds and US debt show the two are more in lockstep. That puts Latin American bonds in the lead, especially as expectations of Federal Reserve unwinding its policy tightening take hold and fuel further gains in Treasuries.

Hawkish rhetoric from emerging Asian central banks, excluding China, is also weighing on their bonds. On the other hand, LatAm bonds benefit as their central banks continue to ease policy.

“While Asian bond yields will mimic moves in Treasuries, a pivot from emerging Asia central banks ahead of the Fed is still an unlikely proposition,” said Sanjay Mathur, an economist with Australia & New Zealand Banking Group Ltd. “At a minimum, we need clear communication from the Fed that its next move will be a ‘cut’ before regional central banks begin easing”

Emerging Asian bonds have historically had a lower sensitivity to Treasuries as they have better creditworthiness and a lower political risk premium compared with other EM peers. Even so, this quarter has seen emerging Asia bonds turn increasingly detached from US debt.

The 30-day correlation between Asian bonds and Treasuries has fallen to 0.01 as of Tuesday from 0.10 at the start of October. The same gauge for LatAm bonds rose to 0.58 from 0.52 over the same period.

Favoring LatAm bonds has been a collective 450-basis-points of rate cuts by the region’s central banks in the second half of the year. In contrast, emerging Asian central banks apart from China have hiked rates by 100 basis points since end-June. The Philippine central bank is expected to keep rates at 6.50% on Thursday, according to a majority of economists surveyed by Bloomberg, while Bank Indonesia will announce its rate decision on Nov. 23.

Despite policy easing, LatAm bonds offer better returns as their benchmark rates are on average around 500 basis points above the Fed fund rate. The same gauge for emerging Asia stands at a discount of 120 basis points.

Even if the Fed keeps its benchmark rates higher for longer, LatAm central banks will have more room to ease rates relative to Asian peers. That’s because real policy rates, which account for inflation, in emerging Asia have an average of about 1.70%, while the same figure in LatAm stands at around 3.90%.

(Updates upcoming Philippine and Indonesia rate decisions in paragraph seven.)