Brighter prospects for active EM bond investors

Stronger China positive for region

Like many other fixed income sectors, emerging market sovereign bond markets endured a difficult 2022.

Roiled by repeated interest rate rises by the US Federal Reserve, as well as the challenges of geopolitics and China's zero-Covid policy-induced slowdown, EM debt markets witnessed double-digit negative returns for the year. But after last year's rout, we see brighter prospects ahead—and the seeds of new active opportunities—for investors in EM bond funds. A more constructive backdrop With the Fed likely nearing the end of its tightening cycle, one of the stiffest headwinds for EM debt in 2022 is showing signs of easing. Our baseline outlook is for the US federal funds rate to reach...