Chapters
Market background
September was a positive month across the emerging market (EM) fixed-income asset class – rounding off a strong quarter and building on robust year-to-date performance.
In the US, weaker labour market data prompted the US Federal Reserve (Fed) to resume its rate‑cutting cycle with a 25 basis point (bps) cut. The Fed also signalled that downside risks facing the labour market will be key in determining future rate decisions; as of quarter-end, the market was pricing in just under two further rate cuts this year.
EM local assets had a good month, with the JPMorgan GBI-EM rising 1.4% thanks to a combination of bond and currency-market gains. Top-performing countries in the index included South Africa, where falling inflation led to a significant drop in yields. Peru’s bond market also performed well, with a 25bps rate cut by the central bank helping here.
The EM hard currency market (JPMorgan EMBI) returned 1.8%, with both investment-grade and high‑yield issuers contributing to returns. A combination of falling US Treasury yields and tighter credit spreads (reflecting improved investor sentiment) helped performance, with the rise in risk appetite helping African markets such as Côte d’Ivoire and Egypt to outperform.
General risks. The value of investments, and any income generated from them, can fall as well as rise. Where charges are taken from capital, this may constrain future growth. Past performance is not a reliable indicator of future results. If any currency differs from the investor's home currency, returns may increase or decrease as a result of currency fluctuations. Investment objectives and performance targets are subject to change and may not necessarily be achieved, losses may be made. Environmental, social or governance related risk events or factors, if they occur, could cause a negative impact on the value of investments.
Specific risks. Emerging market (inc. China): These markets carry a higher risk of financial loss than more developed markets as they may have less developed legal, political, economic or other systems.
