El Salvador's move to embrace Bitcoin has ruffled the feathers of bond investors, with yields spiking as investors indicate uncertainty for the emerging economy.

A Wednesday report published past Bloomberg notes that recently, the yield curve on El salvador's bonds has inverted, significant bonds with short-term maturities are at present yielding more than is due from the instruments. It stated:

"That'due south generally considered a bad sign as it ways investors encounter shorter-term debt equally riskier, and most yield curves volition slope upwards given the inherent uncertainty of pricing things over the longer-term."

Ben Emons of Medley Global Advisors emphasized that Republic of el salvador's bonds lost pregnant ground "on the first day of its new Bitcoin Law," describing the market action as "an unwelcome sign that the wide utilise of Bitcoin may have major implications" for the emerging country.

Emons doesn't appear to be alone in his cess, with Bloomberg's data showing that Republic of el salvador's bonds began moving toward inversion in June — the same month during which the country's parliament passed President Nayib Bukele's controversial Bitcoin Law, recognizing BTC as legal tender.

Related: El Salvador's largest banking concern partners with Flexa for Bitcoin payments

All the same, El salvador's move to recognize Bitcoin as legal tender is non the sole force exerting surly pressure level on the country's bail market.

Other pundits have emphasized Bukele's sudden ousting of the country's constitutional tribunal in May as a major source of negative sentiment regarding El Salvador's economic outlook, with Bukele having fired the country's chaser full general and top judges.

Since May, the spread between Republic of el salvador's government bonds and comparable U.s.a. Treasuries had widened by 77% as of Baronial 12. Bukele's disability to secure a deal with the International monetary fund has likewise impacted the outlook of El Salvador's bond market.

While El Salvador's Bitcoin Police took effect on Tuesday, the rollout for the government-issued "Chivo" digital wallet saw widespread complaints about technical issues from citizens.