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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 4, 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

Risk sentiment was positive this week as a surprise ceasefire between Israel and Iran allowed for a lowering of the geopolitical risk premium in markets. The S&P 500 ended the week up +3.4% and the Euro Stoxx 50 gained +1.8%. Emerging markets (EM) equities also performed well and delivered returns of +3.3%. The US rates curve bull steepened with 2-year yields 16 basis (points) lower and 30-year yields 10bps lower. 10-year US real rates fell by 6bps to end the week at 1.96%.

In EM credit markets, spreads were 3bps wider for corporates and 6bps tighter for sovereigns, while total returns were +0.6% and +1.1% respectively. In the corporate space, the industrials sector was an outperformer while the financials sector was a laggard due to its shorter duration. In the sovereign space, African and Middle Eastern credits were outperformers as regional tensions subsided with Egypt being one of the top performers. Senegal was a notable underperformer as questions remain around its debt sustainability.

In EM local markets, returns were up +1.4% with FX contributing +1% and rates contributing +0.4%. In the foreign exchange (FX) space, some of the EUR crosses such as the Polish zloty and Hungarian forint performed well, while in the rates space Turkey was an outperformer.

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

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