In Credit

Emerging market bonds outperformed last week, hitting their narrowest spreads of 2026 despite escalating Persian Gulf tensions. Meanwhile, core market yields fluctuated based on shifting US rate cut expectations and UK political instability.

Key Takeaways

• 1.Emerging market bond spreads have tightened to their narrowest levels of the year despite severe conflict in the Persian Gulf and the closure of the Strait of Hormuz.
• 2.Resilient US economic data, including strong employment and corporate earnings, has reduced the immediate probability of Fed rate cuts.
• 3.UK gilt markets are experiencing high volatility due to political uncertainty following Keir Starmer's local election losses and potential fiscal expansion under new leadership.

Table of Contents

• Chart of the Week
• JP Morgan Emerging Markets Bond Index Global spread
• Markets at a glance
• Macro/government bonds
• Liability driven investments (LDI)
• Investment grade credit
• US high yield credit and leveraged loans
• European high yield credit
• Asian credit
• Emerging markets

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