Bessent's Treasury Move Is Fueling the Carry Trade. Emerging Markets Are Preparing for a 'Wall of Money.'

At the center of the trade is a strategy where investors borrow in a currency where interest rates are relatively low and put that money into currencies or assets offering substantially higher yields. (Credit: Getty Images)

Emerging markets could be poised for a major influx of investor cash as a weaker U.S. dollar and changes in the Treasury market make high-yielding currencies increasingly attractive, with Brazil, Turkey and Colombia emerging as some of Wall Street's favored destinations.

The shift follows the U.S. Treasury's decision in August to sharply increase its purchases of longer-dated government debt, a move that analysts say has reduced one of the biggest risks facing the popular carry trade.