Juha Seppala
Emerging Market Debt Strategist

Key highlights

  • Russia’s war in Ukraine, along with rapidly accelerating rates of inflation globally, a renewed global hiking cycle, as well as the zero COVID policy in China, have not been kind to emerging market fixed income. As of April 28, the JP Morgan EMBI Global Diversified (EMBI GD), a proxy for US dollar denominated emerging market sovereign bonds, had lost 14.53%. Of this, 8.75% had been due to falls in US Treasury prices and 6.33% due to EMBI GD spread widening.
  • While of course it’s important to emphasize that past performance is not a reliable indicator of future results, for emerging market fixed income at least, sell-offs of this magnitude have often been followed by significant upswings in performance. The question therefore is, should investors dip their toes back into this asset class now?

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