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4 minutes to read by  A.Kettle, BlueBay Fixed Income Team Aug 13, 2026

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

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Risk markets benefitted this week from an ongoing rebound in sentiment in the tech sector, despite back-and-forth headlines around the Iran war, which did little to ease the freedom of navigation issues around the Strait of Hormuz. This resulted in the S&P 500 and the Euro Stoxx 50 gaining +3.6% and +2.6%, respectively, while emerging markets (EM) equities lost -0.5%. The US rates curve saw a bull steepening, with 5-year yields down 10 basis points (bps) and 30-year yields down 7bps. 10-year US real rates were 6bps lower to end the week at 2.39%.

In EM credit markets, spreads were flat for corporates, and 6bps tighter for sovereigns, while total returns were up +0.5% and +0.9%, respectively. In the corporate space, the transport and real estate sectors outperformed, while the infrastructure and banks sectors underperformed. In the sovereign space, the notable performers were Venezuela and Senegal. The biggest underperformers were Argentina, Rwanda, and Gabon.

In EM local markets, returns were up +1.1%, with foreign exchange (FX) and rates contributing equally. In the FX space, the outperformers were the South African rand, Chilean peso, and Mexican peso, while underperformers were the Dominican peso, Turkish lira, and Brazilian real. In the rates space, South Africa, Turkey, and Czech Republic outperformed, while Peru, Romania, and Malaysia underperformed.

Market highlights

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  • The Brazilian Central Bank cut the Selic rate by 25bps to 14% last week, bringing its cumulative easing since March to 100bps. Minutes published after the meeting noted that restrictive policy is still required because of demand-driven inflation alongside supply issues driven by the war in Iran. Markets are pricing in rates as unchanged from here as we approach the Brazilian elections in October.

Market outlook

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Markets are treading water with hopes of Middle East de-escalation, while a US–Iran agreement remains increasingly elusive. There was optimism after Pakistani suggestions that the two sides were moving closer to a deal, but Iran continues to insist the Strait of Hormuz stays closed until its conditions are met. Brent has reversed much of last week’s decline as a result, climbing back towards USD90/bbl and leaving markets more sensitive to any headlines that could send oil closer to the psychologically important USD100/bbl oil mark. This week's US Consumer Price Index (CPI) will also be closely watched in this context, with a benign print set to reinforce the view that the Federal Reserve (Fed) can stay patient despite higher energy prices, while an upside surprise could revive fears that the oil shock is starting to feed through into broader inflation. Yields have edged lower into the release, but the mix of elevated oil and a softening labour market leaves the Fed path finely balanced.

Risk assets have nonetheless held up well, helped by renewed strength in AI-related technology following strong results from CoreWeave and Super Micro, with semiconductor names driving a particularly sharp rebound in Korea. For EM fixed income, the backdrop is constructive despite some of the obvious macro headwinds. Oil holding around current levels continues to favour commodity exporters over energy importers, while resilient global risk appetite and relatively stable core rates remain supportive. We favour selective carry and event-driven opportunities in EM credit, and see value in local markets where domestic easing cycles and attractive real yields can provide a cushion. The main risks from here are a renewed Middle East escalation or firmer evidence that higher energy prices are feeding more persistently into US inflation and global rates.

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Emerging Market Horizons Expanded: click here to discover more emerging markets insights
Disclosure
This material is provided by RBC Global Asset Management (RBC GAM) for informational purposes only and may not be reproduced, distributed or published without the written consent of RBC GAM or its affiliated entities listed herein. This material does not constitute an offer or a solicitation to buy or to sell any security, product or service in any jurisdiction; nor is it intended to provide investment, financial, legal, accounting, tax, or other advice and such information should not be relied or acted upon for providing such advice. This material is not available for distribution to investors in jurisdictions where such distribution would be prohibited.

RBC GAM is the asset management division of Royal Bank of Canada (RBC) which includes RBC Global Asset Management Inc. (RBC GAM Inc.), RBC Global Asset Management (U.S.) Inc. (RBC GAM-US), RBC Global Asset Management (UK) Limited (RBC GAM-UK), and RBC Global Asset Management (Asia) Limited (RBC GAM-Asia), which are separate, but affiliated subsidiaries of RBC.

In Canada, this material is provided by RBC GAM Inc. (including PH&N Institutional), which is regulated by each provincial and territorial securities commission. In the United States (US), this material is provided by RBC GAM-US, a federally registered investment adviser. In the United Kingdom (UK) and Australia this material is provided by RBC GAM-UK, which is authorised and regulated by the UK Financial Conduct Authority. In the European Economic Area (EEA), this material is provided by BlueBay Funds Management Company S.A. (BBFM S.A.), which is regulated by the Commission de Surveillance du Secteur Financier (CSSF). In Germany, France, Sweden, Italy, Spain and Netherlands the BBFM S.A. is operating under a branch passport pursuant to the Undertakings for Collective Investment in Transferable Securities Directive (2009/65/EC) and the Alternative Investment Fund Managers Directive (2011/61/EU). In Spain, BlueBay Funds Management S.A is registered with the CNMV under No. 607. In Switzerland, this material is provided by BlueBay Asset Management AG where the Representative and Paying Agent is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich, Switzerland. In Japan, this material is provided by BlueBay Asset Management International Limited, which is registered with the Kanto Local Finance Bureau of Ministry of Finance, Japan. In Asia, this material is provided by RBC GAM-Asia, which is licensed by the Securities and Futures Commission (SFC) in Hong Kong.

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This material has not been reviewed by, and is not registered with any securities or other regulatory authority, and may, where appropriate and permissible, be distributed by the above-listed entities in their respective jurisdictions.

Any investment and economic outlook information contained in this material has been compiled by RBC GAM from various sources. Information obtained from third parties is believed to be reliable, but no representation or warranty, express or implied, is made by RBC GAM, its affiliates or any other person as to its accuracy, completeness or correctness. RBC GAM and its affiliates assume no responsibility for any errors or omissions in such information.

Opinions contained herein reflect the judgment and thought leadership of RBC GAM and are subject to change at any time. Such opinions are for informational purposes only and are not intended to be investment or financial advice and should not be relied or acted upon for providing such advice. RBC GAM does not undertake any obligation or responsibility to update such opinions.

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© RBC Global Asset Management Inc., 2026
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