- Macro Strategist
United States, Institutional
ChangeThe views expressed are those of the author at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional, or accredited investors only.
Recent years have been a test of emerging markets resilience. COVID generated the largest decline in global GDP in decades. It was followed by the US Federal Reserve (Fed)’s most rapid hiking cycle in many years and quantitative tightening across most developed economies. Persistently slow growth from China also served as another headwind for emerging markets countries over the last several years.
Emerging markets have proven to be resilient in the face of this adversity. This robustness has been most evident in emerging bond markets, with investment-grade sovereign spreads demonstrating stability in recent years, and BB-rated spreads posting a healthy rally. Many currencies represented in the J.P. Morgan GBI-EM (Government Bond Index-Emerging Markets) have delivered positive returns since the Fed started raising interest rates in early 2022, with some delivering double-digit returns at time of writing. A variety of factors contributed to this outcome:
- Policy making in emerging markets has matured. Over the past two to three decades, many have moved towards flexible currencies and inflation targeting. Currency mismatches across public and private sector balance sheets have fallen. This, combined with improved inflation-targeting credibility, means that currencies are now effective adjustment mechanisms to help absorb shocks rather than amplify shocks.
- Improved policy making has allowed many emerging markets to develop large and liquid local markets to help fund governments. Reliance on external sources of funding is much smaller than in the past.
- Management of the inflation shock over 2021–23 bolstered credibility. Central banks in emerging markets began hiking rates much sooner than their developed economies’ counterparts, with many bringing rates well above neutral. Emerging market central banks signalled a clear preference for stable-to-strong currencies to help contain inflation during this period.
- A weaker US-China relationship generates positives (as well as negatives) for emerging markets. Some are benefitting from near-shoring, while robust commodity prices represent a terms-of-trade boost for several other emerging economies. Moreover, many countries benefit from a good relationship with both the US and China – they do not have to choose between one or the other.
There are parts of emerging markets where a series of shocks and poor domestic policymaking have significantly weakened debt sustainability and, in some cases, forced a debt restructuring. These countries tend to be some of the smaller, more fragile economies that struggled in the face of the twin shocks of the global pandemic and the ensuing inflation shock. However, these countries constitute a relatively modest portion of the emerging markets bond universe, and in some cases will present a new opportunity as they work through debt restructuring negotiations.
A positive outlook
Broadly, we expect emerging markets growth to slow moderately in 2024, but we are not expecting a hard growth shock as lower inflation and lower interest rates boost consumer and corporate purchasing power. There is still some work to do on fiscal consolidation, but for most emerging market economies there is much less effort required than in the US to stabilize public debt. Governance will be a key focus given elections across several emerging markets— Indonesia, India, Mexico and South Africa to name but a few — and in the US.
Expert
Related insights
Showing
of
Insights Posts
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Bond Market Outlook
Continue readingMultiple authors
event
2025-06-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Capitalizing on rate shifts: Parsing opportunities in the second half
Continue reading
event
7
min
Article
2025-06-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Impact investing in emerging markets: Growing opportunities, shifting challenges
Continue readingMultiple authors
event
6
min
Article
2025-04-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Macro implications of the AI revolution: is the market right?
Continue readingBy
event
Article
2024-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
The “cleanest dirty shirt” now has too many stains
Continue readingBy
event
Quick Take
2024-09-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
How would emerging markets weather a “standard” recession?
Continue reading
event
Quick Take
2024-08-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
URL References
Related Insights
Stay up to date with the latest market insights and our point of view.
highlight_off
You've been subscribed
Thank you for subscribing. You can manage your subscription using the links provided in any of our subscription emails.
Read next
Showing
of
Insights Posts
Outlook
Fixed income
Geopolitical
Income
Global High Yield
Global Impact Bond
Euro High Yield
Global Credit Plus
Multi-Sector Credit
Opportunistic Fixed Income
Credit
EM debt
Government bonds
High yield
Investment grade
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Bond Market Outlook
Our fixed income experts assess how to capitalize on market volatility with a flexible and dynamic approach that leverages diverse high-yielding opportunities and manages risks carefully.
Multiple authors
event
2025-06-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Fixed income
Interest rates
Outlook
Income
Credit
EM debt
Government bonds
High yield
Investment grade
Article
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Capitalizing on rate shifts: Parsing opportunities in the second half
Fixed Income Portfolio Manager Campe Goodman and Fixed Income Strategist Amar Reganti discuss how to capitalize on potential rate shifts in the second half of the year
event
7
min
Article
2025-06-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Impact
Carbon emissions
Emerging markets
Sustainable investing
Brazil
Africa
Equity
EM debt
Impact investing
Article
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Impact investing in emerging markets: Growing opportunities, shifting challenges
Members of our impact bond team discuss their evolving emerging markets opportunity set and the importance of a bottom-up approach to value creation.
Multiple authors
event
6
min
Article
2025-04-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
China fixed income: Dislocations create opportunities in this large and diverse market
Hear from our experts as they uncover new fixed income opportunities in China.
Multiple authors
event
Article
2024-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Macro and market
Interest rates
Artificial intelligence (AI)
Macro hedge funds
EM debt
Government bonds
Credit
High yield
Investment grade
Fixed income
Alternatives
Macro
Alternatives investing
Article
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Macro implications of the AI revolution: is the market right?
Macro Strategist John Butler sets out an initial framework to help answer key questions about the potential macro impact of artificial intelligence.
By
event
Article
2024-11-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Fiscal policy
Government bonds
Asset allocation
Market commentary
USA
Fixed income
Credit
EM debt
Opportunistic Fixed Income
Quick Take
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
The “cleanest dirty shirt” now has too many stains
Fixed Income Portfolio Manager posits that US fiscal profligacy will change the game for asset allocators.
By
event
Quick Take
2024-09-30
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Economic cycle
Interest rates
EM debt
Opportunistic Fixed Income
Multi-Sector Credit
Global Credit Plus
Fixed income
Emerging markets
Total return
Quick Take
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
How would emerging markets weather a “standard” recession?
Macro Strategist Gillian Edgeworth explores the potential impact of a developed market recession on emerging markets.
event
Quick Take
2024-08-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Economic cycle
Japan
Monetary policy
Opportunistic Fixed Income
Multi-Sector Credit
Global Credit Plus
Euro High Yield
Global High Yield
Government bonds
EM debt
Investment grade
High yield
Fixed income
Equity
Multi-asset
Interest rates
Quick Take
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
How to interpret the Bank of Japan’s latest policy shift
We analyse the wide-ranging investment implications of the Bank of Japan's latest policy shift.
event
Quick Take
2024-08-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Emerging markets
EM debt
Monetary policy
No Optimizely
Inflation
Interest rates
Volatility
Fixed income
Outlook
Article
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Emerging markets debt outlook: A glass half full or half empty?
Against a still-challenging global backdrop for emerging markets, Macro Strategist Gillian Edgeworth highlights opportunities created by extreme credit spread dispersion across individual countries.
event
Article
2023-12-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Credit
High yield
EM debt
Outlook
Income
Risk management
Active management
Portfolio strategy
Economic cycle
Fixed income
Article
No Optimizely
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Credit market outlook: Partly sunny with a chance of good value
In his 2023 credit market outlook, Fixed Income Portfolio Manager Rob Burn highlights some potentially attractive opportunities in the wake of this year's market sell-off.
event
Article
2023-12-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Archived
info
Emerging local debt markets: Time to wade in?
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
Fixed Income Portfolio Manager Michael Henry sees positive trends across ELD fundamentals, valuations, and technicals that could be tailwinds for these markets going forward.
Continue reading
event
Article
2023-08-31
Archived
info
Archived pieces remain available on the site. Please consider the publish date while reading these older pieces.
URL References
Related Insights
contact us
legal Information
© Copyright 2024 Wellington Management Company LLP. All rights reserved. WELLINGTON MANAGEMENT ® is a registered service mark of Wellington Group Holdings LLP. For institutional or professional investors only.
China fixed income: Dislocations create opportunities in this large and diverse market
Continue readingMultiple authors