Summary

• Emerging Market debt (measured by JPMorgan EMBI Global Core Index) declined in a volatile first quarter of 2026.
• EMBD returned -1.53% in 1Q26 versus -1.93% for its benchmark, resulting in 40 basis points of relative outperformance.
• We believe the outlook for EM debt has become more challenging, with risks tilted to the downside as the path to resolving the Middle East conflict appears difficult and a return to pre-war conditions in the Strait of Hormuz remains uncertain.

Emerging Market (EM) debt, as measured by the JPMorgan EMBI Global Core Index, declined in a volatile first quarter of 2026, as an oil-driven geopolitical shock helped lift U.S. Treasury yields and the dollar, widened credit spreads, and overturned the supportive macro backdrop

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