Emerging Markets Bonds

We believe EM fixed income is better positioned today than four years ago, despite uncertainty around the duration of the war and the disruption of oil supply. If de-escalation materializes in the short term, EM bonds may rebound amid a resumption of pre-war trends, including diversification away from US-centric portfolios.

2026 began with the global acknowledgement that the TACO mantra (Trump Always Chickens Out) does not apply to foreign policy. We believe this sends a clear message to leaders of small and medium-sized countries opposing or refusing to cooperate/negotiate with the Trump administration.

Amplíe sus conocimientos sobre la subclase de activos de los bonos de mercados emergentes.

Looking ahead, we expect continued inflows, rising demand, and reduced supply to support EM hard-currency bonds. For EM local-currency bonds, we believe the current macroeconomic environment remains favorable, despite our conviction in a USD bear market being lower than it was a few months ago.

As we approach 2026, Fixed Income markets are shaped by weaker fundamentals, though lower uncertainty may reduce the likelihood of a catastrophic decline. That said, volatility will remain a defining feature. We believe the year ahead holds great potential for active managers who remain steady at the wheel: cautious but nimble.

The Brazilian corporate bonds market has recently been demonstrating signs of volatility. Systemic or idiosyncratic? Or both?

El equipo de renta fija explica cómo los bonos con grado de inversión de mercados emergentes pueden proporcionar rentabilidad y diversificación global, en un entorno de aranceles, crecimiento apagado y riesgos geopolíticos.

Despite questions about the Federal Reserve’s independence, growing US isolationism, and global trade risks, we see a runway for fixed income. Credit fundamentals remain strong alongside robust technicals and improving valuations. Our Fixed Income team shares where they are finding alpha opportunities and why they are cautiously optimistic.

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 US dollar’s reign is faltering, and we believe a prolonged dollar bear market is underway – a scenario that has historically been a tailwind for emerging market economic growth and asset valuations. However, not all emerging equity markets respond equally to the dollar’s decline.

Seguimos siendo prudentemente optimistas sobre la rentabilidad de la renta fija. Los riesgos de cola son elevados, lo que merma nuestra confianza en los mercados alcistas. Sin embargo, sigue habiendo oportunidades de alfa aguardando a los inversores activos y conscientes de los riesgos. Quienes traten de predecir el próximo gran viraje macroeconómico podrían encontrarse haciéndose eco de las palabras de Luke Skywalker: «su exceso de confianza es su debilidad».