2 minutes to read by  BlueBay Fixed Income team, A.Kettle, CFA Oct 3, 2025

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

Risk markets came under some pressure this week as investors questioned the pace of artificial intelligence (AI) technology spending and as tariffs came back into focus, with a proposed 100% levy on branded pharmaceuticals mooted for 1 October. This resulted in the S&P 500 and Emerging Markets (EM) equities losing -0.3% and -1.1%, respectively, although the Euro Stoxx 50 defied the trend and gained +0.8%. The US rates curve bear flattened, with 5-year yields 9 basis points (bps) up while 30-year yields remained unchanged. 10-year US real rates increased by 6 bps, ending the week at 1.8%.

In EM credit markets, spreads tightened by 3bps for corporates and 9bps for sovereigns, while total returns fell by -0.1% and rose by +0.3%, respectively. In the corporate space, the oil and gas and the pulp and paper sectors outperformed, while the industrials and metals and mining sectors underperformed. In the sovereign space, the notable performers were Argentina, Ecuador, and Venezuela, while the biggest underperformers were Mozambique and Jordan.

In EM local markets, returns declined by -0.7%, driven primarily by foreign exchange (FX) losses of -0.5%, while rates contributed a loss of -0.2%. In the FX space, Asia faced the most pressure, with the Philippine peso and Thai baht being the biggest underperformers. Latin American FX was more resilient, though it still posted small losses. Most currencies eked out small gains although weakness came from the Indonesian rupiah and Thai baht. In the rates space, Latin America and the Eastern Europe were the most resilient regions.

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