The recent rally in emerging-market assets stalled on Tuesday as a surge in long-term US Treasury yields and renewed tensions in the Middle East drained demand for risk, snapping a four-day winning streak in stocks and pushing borrowing costs higher.

The selloff underscores the vulnerability of developing economies to shifts in US monetary policy expectations and geopolitical flare-ups. Higher Treasury yields increase the opportunity cost of holding EM debt, while Middle East instability fuels haven demand for the dollar.

Investors had been betting on a Federal Reserve pivot, but resilient US economic data has pushed back rate-cut timelines, lifting the 10-year Treasury yield above 4.5%. Simultaneously, escalating conflict in the Middle East triggered a flight to safety.

The MSCI Emerging Markets Index fell 1.2%, erasing weekly gains. Sovereign spreads widened, and local currencies weakened against the greenback. Market participants now await US inflation data for clues on the yield trajectory.