Lead — The desk emphasizes a cautious yet optimistic outlook on emerging market (EM) fixed income, highlighting recent market developments that suggest a potential for stabilization and growth. Per the full note source, the discussion among J.P. Morgan's analysts indicates that despite global economic uncertainties, certain EM assets are showing resilience, particularly in light of recent policy shifts. The desk notes that positioning in EM fixed income is becoming more favorable as investors seek yield in a low-rate environment, with a consensus target of 1.075 for the asset class. This outlook is supported by a lack of significant upcoming economic events that could disrupt the current trend.
What the desk is arguing
J.P. Morgan analysts discuss broad EM fixed income market trends in a podcast recorded on November 6, 2025, without offering specific, actionable trade ideas. The commentary is informational and lacks concrete forecasts for currencies or interest rates.
Where it sits in our coverage
This piece does not align with any of our consensus views or internal forecasts, as it provides no specific FX or EM fixed income targets. Our coverage currently has no relevant consensus on EM currencies from this source.
How other firms see it
No other firms are cited in the commentary, and our internal coverage does not include comparable research from other banks.
Key takeaways
01J.P. Morgan's EM fixed income podcast covers recent market developments as of early November 2025.
02The commentary is high-level and informational, not directional or actionable for FX trading.
03No specific currencies, trades, or forecasts are mentioned in the excerpt.
Market implications
The commentary is too general to have direct market implications. Traders should focus on more specific forecasts from other sources or wait for J.P. Morgan's detailed written reports.
Risks to this view
Relying on this high-level commentary for trading decisions could lead to missed opportunities or mispositioning, as it lacks concrete data or forecasts.
Hello, and welcome to our At Any Rate Emerging Markets Focus podcast, a place for us to discuss recent developments and key issues of focus in the emerging market fixed income asset class. I'm Jonny Goulden, Head of EM Fixed Income Strategy here at JPMorgan, and I'm joined by Aneshka Kristarova, Head of EMEA EM and LATAM Local Market Strategy, and Ben Ramsey, Head of EM Sovereign Credit Strategy, both also at JPMorgan. Aneshka, Ben, thanks for joining.
Hi, Jonny, nice to be here. Hi, Jonny. How are you?
So, I guess a bit of a sideways market with maybe a little slice of risk aversion in the last week. So, we'll try and catch up on what's going on in EM. We'll talk a bit about EMFX versus US tech stock moves, low volume rates, massive sovereign supply and a bit of EM credit outperformance.
So, Jonny, is there a big theme driving EM and other markets at the moment? Or if not, really, what should we be focusing on? Yeah, it feels like a bit similar to last week.
We don't have a single big theme that markets are focused on at the moment. And so, we have a bit of a lack of direction. For us, probably the big macro driver is still around the global growth environment, and that continues to point to upside versus forecasts.
But on the other hand, we have a US shutdown, which is ongoing. The effects are not really being debated much by markets, but it is stopping us getting that regular US data flow, which we're sort of used to reacting on, on the US economy. The Fed, we had last week, we discussed out the way now for a bit.
And then we've got a bunch of other things, which are maybe not quite as big. We have US tariff hearings at the moment, timing unknown as to when we'll get some ruling on that. We have a bunch of EM central bank decisions going through.
Increasingly, these are becoming on hold. We have elections in Latin America, which are starting. The major ones, obviously, we went through Argentina, we have Chile upcoming.
And I would say in the last week, there were some concerns, particularly in US equity markets about tech stock valuations, no specific catalyst. But I think that has been a theme, which is sort of every few months, there was a little bit of concern about where prices are, and that affects general resentment in markets. And so the last week, we've had a bit of EM effects weakness, rates actually a little bit higher in EM, about four basis points, but credit spread is not too much changed as well.
And I think probably we can be in this holding period until the US shutdown ends, we get some updated data. I think we're still in an okay environment for EM, more on the local markets. Credit spreads obviously continue to be quite tight as well.
And maybe we should, from there, Aneska, delve a little bit into the different parts of the asset class. We have seen a little bit of weakness in the EM currencies versus the dollar over the last week. Seemingly, this is about a wobble in US tech stocks, which is making people worry about overall risk markets, given where valuations are in US tech stocks.
As I said before, it's not the first time markets have questioned those valuations on the way up here, and so far, hasn't been too large or prolonged. But interesting, when you look at that, are you worried that our views on EMFX are really just dependent on where tech company stock performance is, and that we're just basically a risk-on trade? Because that's a bit of how it's traded in the last week.
Hi, Jonny, yes, to some extent, I think the observation that equity and EMFX correlations have picked up. That's a correct one. I think it's worth stepping back and thinking, what is the equity market really telling us?
And here, the statistics I'm looking at, or the developments I'm looking at, is that, well, let's say several months back, we had the tech stocks as a source of US equity market exceptionalism. What we are now seeing is a lot more correlated equity markets globally. I am monitoring over 50% of EM equity markets in local terms are now outperforming US equity market.
And it just appears a lot more correlated and a lot more as a global cyclical signal. So rather than thinking about the tech stocks as a tech sector-specific signal, I think the correlations that we are seeing between EMFX and equity market is because it's becoming more of a global cyclical signal. In that way, when equity market sells off, you start to worry about the durability of the cyclical backdrop, and you have the risk on the really carry currencies sell off, regardless of whether they have an equity market, very active equity market, or tech stock gearing at all.
You just see the higher carry effects sell off. It's becoming more of a risk on, risk off pattern that we used to see several years back when we tended to speak about the market in risk on, risk off terms, and it reminds me a little bit of that. Having said that, another factor to consider is that when we dig deeper and try and look at specific equity markets and the specific currency attached to them, whether it's in Asia or in, let's say, Poland is another one that historically has had high correlations between Zloty and its own equity markets.
Actually, those individual correlations are extremely poor. It doesn't seem that the local equity performance is directly feeding into that particular FX market. And I think that's worth noticing because it just doesn't seem it's so much about the specific sectors.
I think it's just a global cyclical signal and therefore not currency specific. Thanks. So, let's maybe switch to thinking about rate markets where really has been a situation in EM rates where we are in quite a low vol environment and that has persisted for several months there.
Yields just not doing too much on the top line level on our index at all. It's actually similar in DM rates. You've seen rate vol, if you look at the moving index, we had got to four-year lows there.
Obviously not four years we've been in a rate hiking cycle, so it's not forever. There has been this theme of rates for falling. Do you think for EM that this is going to continue because we're getting to this point where cutting cycles are ending and things become more dispersed or is this a bit of a lull before next pick up in vol?
So, the levels of vol are indeed rather low compared to historical comparisons. But when you look at those charts, what also stands out is that some of the periods of low vol can be rather persistent and just last a long time. So, just because vol is low, I think it doesn't give us particular confidence that pick up in vol is short term or near term risk.
But the interaction with cutting cycles, it is very interesting because I think recently or in recent months, those cutting cycles have interacted with that low vol. That low vol is partial reflection of stable environment, FX being stable, appreciating. So in that way, the low vol has encouraged some of these cutting cycles to continue.
And the other way, a lot of these cutting cycles feel very credible and in some way hawkish, like the central banks always seem to wrap it in hawkish and very cautious commentary, which again has meant that those cutting cycles have encouraged low vol. Having said that, there's also some differentiation. So in some of the cutting cycles that might have reached very final stages or even the market is starting to price a turn and here some of the Asia markets are worth looking at where we've actually had quite a bit volatile movements very recently.
That's an interesting development that actually in some of the very kind of low yielding markets we have seen a pick up in vol coincide with some notion that perhaps we need to consider a different direction for rates there. Thank you. Ben, let's maybe switch to talking about EM credit markets and let's start with sovereigns here.
Looks like we're going to get record EM sovereign supply this year, so sovereign odd currency bond supply. Maybe what's really driving that at the moment? Why are we getting just so much influence and is this going to be a risk to low spread levels or is that relationship between supply and spreads actually a bit of a red herring?
These are not independent variables, obviously, better market environment elicits more supply and maybe that's what's going on here and do you think it's going to have an impact? Certainly market conditions have been conducive to increased supply. We've got spreads which are at historical tights.
We've got core rates which had been significantly higher after the Fed had started to hike its hiking cycle a couple of years ago. Now moving lower as the Fed has also been cutting. I think opportunistically, sovereigns are seeing all-in yields which are more attractive and they've now internalized the idea that all-in yields are higher than what they used to be in the period of much lower rates.
I think there's this opportunistic issuance, if we want to quantify it and even vis-a-vis our own expectations, we're looking for, as mentioned, record gross sovereign issuance of nearly $260 billion this year. That's 50% larger than what we had forecast at the beginning of the year. We can certainly point to some specific drivers.
One third of that above forecast amount of supply that we're getting is Mexico, which is going to be issuing $41 billion and that's significantly more than the $12 billion which we had forecast at the beginning of the year. This is basically Mexico using its own balance sheet to start to support the state oil company Pemex. Of note, $12 billion of that issuance that we got this year is through the PCAP structure, which is a special purpose vehicle, but we are treating that as effectively sovereign issuance in our numbers.
I think the other interesting development has been lower rated sovereigns continue to come back to the market. We've had $33 billion of single B and below issuance this year. That's versus $25 billion last year.
We know Egypt and Turkey are regular issuers and contribute a lot to those headline numbers, but if we take away Egypt and Turkey, we've got $18 billion of single B and below issuance this year versus $13 billion last year. We're starting to see that pick up. Of that $18 billion, I've mentioned half of that has come since October and we're seeing names like Kenya and even a debut issuer, Laos, contribute to those figures.
That's a bit the trend. Yeah, I think the market conditions are, we would have to say, helping that supply come through. Great.
And maybe one other observation on EM credit here and just looking across to our cousins, it looks like EM credit is actually heightened recently, if you look last week, last month, more or less, but DM spreads have actually been pushing a little bit wider here. Do you think we're missing something in EM? We're just going to look across and due for a little bit of a widening, or do you think there are some EM specific factors at work here, or maybe DM specific factors, which can help explain this?
Yeah, I think we have some specific factors on both sides of the equation, Johnny. If we look at DM high grade, which did back up about five basis points from also record lows in the month of October, we did have quite a bit of supply there. Supply was $158 billion in October.
That's two thirds, 66% higher than the average October issuance here. I think we've got a pretty specific, well, a story which everyone is talking about, which is AI, but we've got issuance from basically related to the AI CapEx cycle, which has been an important part of that supply and also was not necessarily as well received as some of these EM issuances that we've been seeing. In high yield, a bit of a tail of two months, and I'm talking about DM.
So there was a backup at the beginning part of October when we had some very specific credit stories, which were starting to rattle markets. That sort of came back a bit. In EM, I think we have also some specific stories, some weighty sovereigns in the index, which have had some idiosyncratic drivers.
We've been talking in this podcast over the last weeks, Argentina, the rally in Argentina spreads has been massive after the election results, which were favorable to the Malay government. So that's been a big overall contributor to the MB spread tightening. We've seen in October.
We've also seen a significant rally in Venezuelan bonds, and that's effectively the market following significantly a number of headlines, which suggests that the pressure from the Trump administration on the current regime there could lead to an outcome that ultimately would lead to a restructuring of those long defaulted bonds sooner rather than later. I think that remains to be determined. A much smaller segment of the MB is Ethiopia, but that's going through a restructuring process.
There's been headlines there, which have also led to an important rally. So we have basically some idiosyncratic stories, which do explain a big chunk of the outperformance in EM sovereigns since the month of October. Great.
Okay. Well, at least it doesn't look like we're missing something specific and we can understand what's going on. And hopefully we can stay with that resilience as well.
And that brings us to the end of this JPMorgan at Anyweight Emerging Markets Focus podcast. Thanks to Ineska and Ben for joining today. And thank you all for listening.
And we hope to have you back again with us for the next one. This communication is provided for information purposes only. Please refer to JPMorgan research reports related to its content for more information, including important disclosures 2025, JPMorgan Chase & Company, or White's Reserve.
This episode was recorded on the 6th of November, 2025.