At Any Rate EM Fixed Income: (EM) Credit where credit’s due
Sep 18, 2025
Join Ben Ramsey, the Head of EM Sovereign Credit Strategy, as he dives into critical discussions about the Fed's interest rate cuts and their effects on emerging markets. He shares insights from the Emerging and Frontier Markets Opportunities Conference, highlighting investor hotspots like Nigeria and Ecuador. The conversation touches on macro drivers shaping sovereign credit sentiment, along with exciting themes in corporate markets. With a focus on risk and valuation, Ramsey's expertise shines, bringing clarity to complex EM landscapes.
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Fed Cuts Boost EM Local Markets
- The start of the Fed cutting cycle materially supports EMFX and local rates by eroding the US carry advantage.
- JP Morgan expects further cuts to the end of the year, helping EM local markets despite mixed Fed messaging.
Sovereign Spreads Face Valuation Risk
- Sovereign credit has outperformed but valuations look tight, prompting investor caution despite positive sentiment.
- A US growth shock or wider recession risk could trigger significant sovereign spread widening from current levels.
Trim Gains And Seek Primary Deals
- Stay invested selectively in EM corporate credit while trimming positions where profits are large and valuations are stretched.
- Use yield carry as a buffer and consider primary market opportunities rather than large directional bets on spreads.