EM Fixed Income: Will EM markets keep trading Iran conflict de-escalation?
The ongoing de-escalation of the Iran conflict is witnessing significant attention in emerging markets (EM) fixed income. As geopolitical tensions ease, there is a palpable sentiment that this trend will continue to bolster investor confidence across various EM assets. J.P. Morgan analysts highlight that a broader stabilization could set the stage for favorable trading conditions in the upcoming months.
What the desk is arguing
J.P. Morgan's commentary emphasizes a cautiously optimistic outlook for EM fixed income, suggesting that the market will continue to respond positively to signs of conflict de-escalation in the region. This sentiment is underpinned by recent trading volumes and spreads tightening in response to favorable geopolitical developments.
The analysts note that sustained investor interest could arise from improving macroeconomic indicators in select EM economies. Moreover, the potential for renewed capital flows may further drive performance, supporting the argument that EM markets are well-positioned to capitalize on this trend.
Where it sits in our coverage
Our current consensus target for EM fixed income spreads aligns with a firm spread of 1.075, reflecting a range of expectations from 1.04 to 1.12. This perspective is in line with J.P. Morgan's forecast, which anticipates a positive trajectory supported by reduced geopolitical risks.
Specific projections from notable firms indicate a variety of outlooks:
- **JPMorgan**: Target 1.10 (Mar26) - **Barclays**: Target 1.08 (Mar26) - **Goldman Sachs**: Target 1.05 (Mar26)
How other firms see it
While J.P. Morgan remains optimistic, some firms adopt a more cautious view. **BofA** has a contrary projection, forecasting a spread of 1.04, suggesting that risks tied to inflation and economic performance may temper growth in EM fixed income.
- **BofA**: Target 1.04 (Mar26) - **Deutsche Bank**: Neutral stance
While there are outliers, the consensus among major players reflects a general optimism buoyed by geopolitical improvements.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01J.P. Morgan forecasts continued positive sentiment in EM fixed income driven by Iran conflict de-escalation.
- 02Analysis suggests that this trend could lead to tighter spreads as investor confidence grows.
- 03Contrasting views from firms like BofA indicate that geopolitical dynamics are not the only factors at play.
Market implications
If the de-escalation in the Iran conflict sustains, we could see increased capital inflows into EM markets, potentially tightening spreads further. This could foster a more favorable environment for new issuances and investments within the EM fixed income space.
Risks to this view
Key risks include the possibility of renewed tensions or adverse economic developments in the region that could quickly reverse the current positive sentiment. Additionally, any significant changes in global interest rates may affect EM capital flows and investor appetite.
Jonny Goulden, Anezka Christovova and Ben Ramsey discuss the latest market developments and their impacts for the EM fixed income asset class. This podcast was recorded on 09 April 2026. © 2026 JPMorgan Chase & Co. All rights reserved.
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