Jefferies' Christopher Wood's base case is that since March 2020, G7 bonds "have entered a structural bear market after a 39-year bull market."

As borrowing costs across multiple economies continue to hit multi-year highs, it could be time to turn to emerging-market debt, according to Jefferies.

Since the start of September, the U.S. bond market has faced a selloff that has also rippled through to European bonds. The yield on the 10-year Treasury BX:TMUBMUSD10Y was at 5.243% early on Friday, down slightly from Thursday's level but remaining elevated, and the 30-year's yield BX:TMUBMUSD30Y was hovering around the 5.613% mark on Friday, with both having reached highs not seen since 2002 the previous day.

Also on Thursday, French, German and Italian government bond yields reached multi-year highs on ongoing uncertainty over when the war in Iran will end - and oil prices may ease - which led to headline inflation in the eurozone unexpectedly rising from 3.2% to 3.8% on Friday, marking a three-year high. The news adds to concerns of upcoming interest-rate hikes by the European Central Bank, also at a time when France is grappling with its budget deficit, with belt-tightening measures proving unpopular with opposition parties.

For Christopher Wood, global head of equities strategy at Jefferies, it's important to note that local currency bonds in emerging markets have continued to outperform those from the Group of Seven - the U.S., Canada, the U.K., France, Germany, Italy and Japan - when measured in U.S. dollars.

Since March 2020, when countries worldwide entered into lockdowns during the COVID-19 pandemic, Bloomberg's emerging-markets local currency government bond index has outperformed its G7 government bond index by 59%, he wrote in a report published Thursday.

Similarly, he said, Jefferies' global sovereign debt portfolio, which only contains local-currency government bonds, has outperformed Bloomberg's G7 bond index by 73.5% since it was first created in March 2020, when Wood first advised selling all G7 bonds.

The Jefferies' portfolio consists of China's renminbi 5-year bond BX:AMBMKRM-05Y, which has a 20% weight, India's rupee 15-year bond, with a weight of 25%, the Singapore dollar 10-year bond BX:AMBMKSG-10Y, which has the same weight, and the Brazil real 10-year bond, with a weight of 30%.

His base case is that since March 2020, G7 bonds "have entered a structural bear market after a 39-year bull market."

-Nora Redmond