Bloomberg Daybreak: Asia Edition Emerging Markets in Focus, Japan Leadership Race
5 snips
Oct 3, 2025 
Joining the discussion are Jeff Grills, Head of EM Debt at Aegon Asset Management, who specializes in emerging markets, and David Boling, Director for Japan and Asia Trade at Eurasia Group, an expert in Japanese politics. They dive into the political risks impacting emerging markets and analyze which nations may benefit from lower U.S. interest rates. On Japan's upcoming leadership race, Boling discusses candidates' stances on inflation and potential shifts in economic policy, amid the backdrop of rising defense spending and fiscal constraints.
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US Rates Likely To Drift Lower
- Jeff Grills expects US rates to be slightly overvalued and to drift lower over the next 12–18 months.
- He forecasts 10-year yields nearer 3.50–3.75% and a steeper curve due to fiscal pressures on long-end yields.
Where To Find Value In EM Debt
- Overweight stable Latin American credits like Colombia and Costa Rica for relative value in EM credit.
- Consider opportunistic exposure to Argentina for higher upside if political risks moderate.
EM Would Lag In A US Market Pullback
- In a US equity pullback, emerging markets would likely underperform and not be the first destination for repatriated cash.
- EM spreads could widen materially in stress, but current drivers (like AI spending) reduce the chance of an extreme scenario.