At Any Rate EM Fixed Income: Assessing the situation and path ahead for EM in Week 2 of the Middle East conflict
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Mar 12, 2026 Ben Ramsey, Head of EM Sovereign Credit Strategy at J.P. Morgan, offers quick takes on sovereign valuations and spread vulnerability. Anezka Christovova, Head of EMEA EM and Latam Local Market Strategy at J.P. Morgan, explains EMFX resilience and local rates stress. They discuss the Middle East shock timeline, oil flow risks, where to add local risk, and sovereign winners and laggards.
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Conflict Is A Genuine Shock To EM Cyclical Outlook
- The conflict is a genuine shock that reverses prior cyclical optimism in EM markets.
- Jonny Goulden expects a cautious three-to-four week air campaign and warns oil-driven inflation and growth damage could be larger if the war prolongs.
Cut Local Positions And Be Ready To Buy Stabilisation
- Cut local market positions and move closer to home during the shock to preserve capital.
- Use any stabilisation as a buying opportunity but remain mindful of persistent high inflation and lower growth risks.
EMFX Resilience Versus Rates Vulnerability
- EMFX has been surprisingly resilient with worst performers down ~4-5% versus the dollar and the EMFX risk appetite index moved from extreme positive to neutral.
- Anezka Christovova notes central bank management and starting positioning helped limit moves, while rates showed larger, position-driven volatility.