Summary

• Increased volatility resulting from escalating conflict in the Middle East led to rising energy prices and fears of higher inflation, which put downward pressure on EM bonds in Q1.
• EM bonds rallied during the first two months of the quarter, but gave up those gains in March amid escalating conflict in the Middle East.
• We began the quarter neutrally positioned from a risk perspective, but as concerns mounted around potential military escalation in the Middle East in late February, we implemented tactical downside protection strategies.

Quarterly commentary

Highlights

• Increased volatility resulting from escalating conflict in the Middle East led to rising energy prices and fears of higher inflation, which put downward pressure on EM bonds in Q1.
• Within EM, performance