Do investors really believe emerging markets are now a safer place to be than developed economies? A glance at bond indices would suggest as much. For most of the past decade, spreads on sovereign bonds rated BB and below have moved in line with similarly rated US bond indices. But, since last summer, the paths have diverged. The premium for investing in junk-rated emerging market bonds is now about the same as for buying US corporate bonds on the lowest rung of investment grade.

For subscribers to the decoupling theory, this suggests that emerging market economies have matured enough to take up the slack should the US tip into a full-blown recession. But the underlying picture is more complicated.