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BlueBay Emerging Market Debt Update

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2 minutes to read by  A.Kettle, BlueBay Fixed Income Team Jul 31, 2025

Senior Portfolio Manager Anthony Kettle’s weekly BlueBay Emerging Market Debt commentary offers readers a concise yet wide-ranging macro overview. Kettle covers markets large and small, providing insight on how financial, political, and economic developments in one region affect markets elsewhere. Here is his latest insight.

Summary

Further progress on trade deals, including a notable agreement with Japan, helped risk markets this week with the S&P 500 gaining +1.5% and Emerging Markets (EM) equities returning +0.7%, while the Euro Stoxx 50 was relatively unchanged at -0.1%. The US rates curve twist flattened with 2-year yields 5 basis points (bps) higher and 30-year yields 6bps lower. 10-year US real rates fell by 1bp to end the week at 1.97%.

In EM credit markets, spreads were 2bps tighter for corporates and 7bps tighter for sovereigns, while total returns were up +0.3% and +0.8% respectively. In the corporate space, the consumer and diversified sectors were outperformers while the industrial sector underperformed. In the sovereign space, Africa as a region outperformed as risk markets supported spread compression in higher beta names, while Pakistan benefitted from a ratings upgrade. Venezuela also outperformed on hopes of a thawing of relations with the US.

In EM local markets, returns were up +0.3% with foreign exchange (FX) gaining +0.1% and rates gaining +0.2%. In the FX space, the Hungarian forint, Polish zloty and Czech koruna did well while the Columbian peso was a clear underperformer. In the rates space, Turkey and South Africa outperformed while China was an underperformer.

Download this article for the full market highlights, market outlook, and latest performance.

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