Global Macro Update Double the Return with Lower Volatility
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Mar 6, 2026 
Eric Fine, an emerging markets bond portfolio manager at VanEck, explains why EM bonds currently yield about double developed markets with lower volatility. He discusses Middle East shocks creating winners among oil exporters. He covers currency diversification, the dollar sharing reserve status, and a blended local vs dollar EM bond approach.
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Commodity Exporters Benefit From Middle East Shocks
- EM bonds are skewed toward commodity exporters, so geopolitical shocks (like Middle East events) create clear winners among oil exporters in LATAM and sub‑Saharan Africa.
- Eric Fine stresses they evaluate country‑by‑country and avoid making pure oil‑price bets, using risk limits and stress tests instead.
De Dollarization Works Quietly Through Bond Buying And Hedging
- De‑dollarization shows up not as immediate dumping of dollar assets but via hedging and central bank allocation shifts into local bonds and gold.
- Fine notes central banks quietly buy bonds in local currencies and reduce hedging costs, which alters portfolio yields for foreign investors.
Dollar Will Share Status While CNY Rises As A Reserve Currency
- The dollar will slowly share reserve status rather than abruptly lose it; the Chinese renminbi is a rising reserve currency over a multi‑year horizon.
- Fine expects CNY appreciation (e.g., 7 to 6) within years, which would lower trading partners' inflation and yields.