Investment teams

Job creation, or rather a lack of it, has been in the spotlight recently as weak non-farm payrolls data in the US has driven a rally in government bonds and strengthened market projections for rate cuts.

Strong performance of EM local currency bonds has been driven by a bearish US dollar and fundamental factors supporting sustainable appreciation toward a stronger equilibrium.

With strong fundamentals, broad region and sector diversification, and a track record of weathering financial crises, emerging-market investment-grade (EM IG) bonds have evolved into a high-quality asset class, in our view. Yet, despite a robust risk-return profile, EM IG remains significantly underrepresented in actively managed, dedicated strategies.

Accelerating rating upgrades and renewed inflows into the asset class are likely to support EM spreads relative to their historical levels and other credit markets. Absent a major global shock, we expect EM bonds to remain resilient, offering stable carry even if capital appreciation becomes more difficult to capture.

The next few days could be pivotal to any concerns around the independence of the US Federal Reserve (Fed).

Markets inevitably shift, but global diversification endures. A thoughtfully constructed portfolio that combines leading US and non-US companies can offer meaningful advantages to long-term investors: enhanced performance potential, compelling valuations and access to growth industries where the US lags.

The European Central Bank (ECB) is reportedly accelerating its work on a digital version of the euro (the dEuro), having seen the US pass the Genius Act in July which paved the way for broader adoption of so-called stablecoins.

The $5.2tr asset-backed finance (ABF) market represents a growing opportunity to gain exposure to high quality loan pools and the returns they can generate.

We have long harked on about the strength of the technical in credit, with solid fundamentals, resilient inflows and defensive positioning continuing to provide a tailwind for the market.