Emerging Markets

Unlike in past episodes, US dollar weakness will be deflationary, not reflationary, for the rest of the world. In this context, EM local currency bonds offer a superior risk-reward profile. Stay long domestic bonds in select EM countries.

Our Portfolio Allocation Summary for June 2025.

MacroQuant warns that US equities are pricing in very little economic risk. The model is shunning equities and recommends a large overweight to cash.

MacroQuant warns that US equities are pricing in very little economic risk. The model is shunning equities and recommends a large overweight to cash.

Peru’s economic resilience will help its markets outperform their EM peers. Domestic macro fundamentals are robust, and strong external accounts will lead to a stable-to-strengthening currency versus the US dollar. Overweight Peruvian equities, local bonds, and sovereign credit relative to their respective EM benchmarks, and go long 10-year domestic bonds (currency unhedged).