Emerging economies (EM) are struggling to recover from the pandemic and are lagging the recovery of developed markets (DM). We believe most of EM will be in recession in 2020. So far, emerging markets fixed income (EM FI) has reacted positively to the global policy response and is following global factors. Even after the rally in Q2, valuations remain attractive. If global risk appetite remains elevated, EM FI could rally further in Q3.