Federico Kaune
Head of Emerging Markets Fixed Income


  • Emerging markets fixed income delivered negative total returns in Q3, mostly in response to policy mistakes and reversals by developed market central banks.
  • Emerging markets are facing the negative price effect of higher global rates as developed market central banks continue to fight inflation, while starting to feel the negative income effect from lower global growth.
  • Weak cyclical growth in China is likely to be detrimental to emerging markets as China is one of the three most important pillars driving global trade and growth and a large consumer of commodities. In the absence of China’s recovery to counteract a recession in the US and the Eurozone, emerging market external and fiscal dynamics could weaken on lower commodity prices and export volumes.
  • In emerging market sovereign credit ratings, our analysis shows that while between 2003-2012 there was a slow improvement in average credit quality, since 2013 they have deteriorated.
  • Chile has long been considered the Switzerland of Latin America, with a neoliberal market-led economic model that was deemed beneficial for the country. However, since the severe social unrest and political crisis in 2019, Chilean financial assets have traded with a significant risk premium. We assess the outlook for the country’s currency and bonds.

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