Podzept - The Bigger Picture Let's talk thEMes - 2026 Outlook: Get Involved
Dec 8, 2025
Tyanili (Dan) Mesia, a senior economist specializing in EMEA, joins Christian Vitoska, an EM rates analyst; Ollie (Oli) Harvey, an FX strategist; and Francisco Campos, Chief Latin America Economist. They explore why emerging markets (EM) still have room to grow, driven by policy dynamics and currency factors. Discussion includes low volatility in EMFX, attractive EM local bonds, and the diverse macro drivers in Asia and Africa. They also highlight the electoral risks in Latin America, emphasizing that choices will significantly affect future stability.
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AI Capex To Boost Asia Growth
- Asia should benefit from AI capex because it supplies the bulk of advanced hardware and chips.
- Renminbi internationalization and calibrated appreciation are also likely supportive for Asian FX next year.
Favor EM Local Bonds, Watch Dollar Risk
- Favor EM local-duration and carry where inflation is falling and term premia remain attractive.
- Watch for a sustained stronger US dollar or higher US rates as the main risk that would hurt EM local returns.
Tighter Spreads Backed By Better Flows
- EM sovereign spreads have tightened beyond what common global drivers justify, but fundamentals and upgrades support tighter spreads.
- Diversified flows (sovereign wealth, local investors, euro issuance) make current spread levels more sustainable.