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One of our four 2026 global fixed income themes explores the blurring between developed and emerging markets. Political, fiscal and institutional risks once reserved for emerging economies increasingly apply to developed markets, while many emerging nations have strengthened their fundamentals — expanding opportunities for fixed income investors.
Key takeaways:
- Although geopolitical turmoil has weighed on markets, emerging markets debt remains an attractive longer-term opportunity due to ongoing structural dynamics.
- Blurring market distinctions, expanding EM corporate opportunities and a declining U.S. dollar all support EM going forward.
- Emerging markets debt can provide attractive additional yield over similarly rated developed market securities.
- Consider judiciously adding exposure through more diversified approaches like multi-sector or core plus bond strategies or a dedicated EM strategy.
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Endnotes
Sources
Inflation: U.S. Bureau of Labor Statistics Consumer Price Index for All Consumers. Employment: Bloomberg, L.P., Bureau of Labor Statistics, Nuveen. Global debt and yields: Bloomberg, L.P.
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