Emerging Market Debt Indicator January 2024

Our EM Debt team provides an update across the investment universe and shares the latest outlook and current top-down positioning.

9 Feb 2024

14 minutes

EMD Team


Market background
Top-down views and outlook
Latin America
Central and Eastern Europe, Middle East and South Africa
EM corporate highlights

Market background

Close-up of dark green leaves
Indications from the US Federal Reserve that interest-rate cuts will only happen later in the year weighed on fixed income markets. US economic data remained robust, and the US dollar strengthened against emerging market currencies.

Initial optimism around looser US monetary policy was tempered at the end of January, when the US Federal Reserve (Fed) updated the market. Recognising that market expectations were running ahead of the central bank, Fed Chair Jerome Powell made it clear that a rate cut was unlikely in March. US GDP and jobs data remained strong, further feeding the narrative of a soft landing for the US economy. On the geopolitical front, tensions remained high following an attack on a US air base in Jordan, while Houthi rebel attacks on commercial shipping in the Red Sea continued to disrupt supply chains, which prompted joint military responses from the US and UK governments.

Within emerging markets (EMs), inflation continued to fall and come in lower than expectations in Central and Eastern Europe, while growth data remained soft. In Latin America, central banks in Chile, Colombia and Brazil cut their respective interest rates, with the trend of falling inflation continuing. In China, Q4 GDP was weaker than expected, and the People’s Bank of China (PBoC) announced a 50bps cut to the reserve requirement ratio.

Turning to EM debt market performance, the local currency bond index (JP Morgan GBI-EM) fell 1.5%, driven by currencies, which came under pressure from the stronger US dollar. In the hard currency debt market, the sovereign index (JP Morgan EMBI) returned -1.0%, while the EM corporate debt market (JP Morgan CEMBI) gained 0.6%.

Authored by

EMD Team

Important Information

This communication is provided for general information only should not be construed as advice.

All the information in is believed to be reliable but may be inaccurate or incomplete. The views are those of the contributor at the time of publication and do not necessary reflect those of Ninety One.

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Investment Process
Any description or information regarding investment process is provided for illustrative purposes only, may not be fully indicative of any present or future investments and may be changed at the discretion of the manager without notice. References to specific investments, strategies or investment vehicles are for illustrative purposes only and should not be relied upon as a recommendation to purchase or sell such investments or to engage in any particular Strategy. Portfolio data is expected to change and there is no assurance that the actual portfolio will remain as described herein. There is no assurance that the investments presented will be available in the future at the levels presented, with the same characteristics or be available at all. Past performance is no guarantee of future results and has no bearing upon the ability of Manager to construct the illustrative portfolio and implement its investment strategy or investment objective.