Navigating Rates

EMD Monthly Market Musings - New year, new opportunities – more strong returns for EMs?

04/02/2026

After strong performance in 2025, we think emerging markets (EMs) are poised for another good year, supported by improved macro fundamentals, solid policymaking frameworks and more stable politics. Our outlook for a weaker US dollar implies a tailwind for EM local currency opportunities, which we continue to prefer. Net sovereign issuance is likely to fall, the asset class remains under-allocated, and foreign inflows are coming back, including from China.

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