EM Fixed Income: Brace for a long, stormy summer
We provide a review of the themes which impacted Emerging Markets Fixed Income over Q2 2022 and an outlook for Q3
Key highlights
Key highlights
- Emerging markets fixed income (EMFI) delivered negative total returns in Q2. Emerging market asset performance during the third quarter of 2022 is likely to continue to be influenced by high inflation, fear of recession and ambiguity from developed markets (DM) central banks.
- EM central banks are far more advanced in their tightening cycles vs developed markets as they responded earlier. DM central banks looking at financial conditions before making any policy actions (regardless of current inflation) could exacerbate inflation expectations and market volatility.
- Geopolitical uncertainty remains elevated as the Russian invasion on Ukraine continues to disrupt markets and US-China relations deteriorate. Food and energy inflation is disrupting the social and political fabric in vulnerable emerging countries
- Value has been restored in EMFI. Spreads in EM HY credit are wide enough to compensate for higher potential defaults from vulnerable countries. Local yields are high and EMFX is cheap. However, global factors need to improve for that value to be realized.
Related insights
- Real Estate Outlook – Switzerland, Edition 1H25
- Making diversification great again
- TRTPM monthly blog – Edition March 2025
- The expanding opportunity set
- Unified Global Alternatives – Hedge Fund Bulletin
- AI and datacenters: A new source of electricity demand
- Navigating fixed income in 2025: Key trends and insights
- Opportunities in UK commercial real estate
- The strategic and tactical case for loans
- Go against the tide, or with the flow?
Contact us
Make an inquiry
Fill in an inquiry form and leave your details – we’ll be back in touch.
Introducing our leadership team
Meet the members of the team responsible for ÃÛ¶¹ÊÓƵ Asset Management’s strategic direction.
