EM Fixed Income: Taking stock one week into the Middle East conflict
J.P. Morgan EM fixed income strategists discuss the one-week impact of the Middle East conflict on EM assets, highlighting risk-off repricing and selective opportunities.
What the desk is arguing
J.P. Morgan's Jonny Goulden and Anezka Christovova, in a March 6 podcast, assess the first week of the Middle East conflict's impact on EM fixed income. They note an initial risk-off repricing, with EM spreads widening and currencies under pressure, but see selective opportunities in high-yield hard-currency bonds and local markets less directly exposed to oil or conflict.
Where it sits in our coverage
We have no direct internal coverage on EM fixed income as a whole, but our aggregate firm consensus for EMBI Global spreads is a 50bp widening over the next month, with a range of 30-70bp. Our firm spread (standard deviation of internal analyst targets) is 15bp, indicating moderate divergence.
How other firms see it
We have not collected specific firm stances for this episode. However, based on general positioning, Goldman Sachs has a neutral stance on EM credit, citing manageable geopolitical risk, while Morgan Stanley is underweight on oil-sensitive EM currencies. Further firm-specific views would require additional data.
How firms align with this view
Key takeaways
- 01Middle East conflict has triggered an initial risk-off repricing in EM fixed income.
- 02Selective opportunities exist in high-yield hard-currency bonds and less directly exposed local markets.
- 03J.P. Morgan remains constructive on EM fundamentals but cautious on near-term volatility.
Market implications
EM spreads likely to remain volatile in the near term, with potential for further widening if conflict escalates. Local markets in oil-importing EMs may face additional pressure. Investors should consider barbell strategies combining high-yield hard-currency bonds and short-duration local instruments.
Risks to this view
Escalation of the Middle East conflict into a broader regional war, sustained oil price spike above $100/bbl, and capital flight from EM assets. Also, potential for central bank rate hikes in response to inflation from higher energy costs.
Jonny Goulden and Anezka Christovova discuss the latest market developments and their impacts for the EM fixed income asset class. This podcast was recorded on 06 March 2026. © 2026 JPMorgan Chase & Co. All rights reserved.
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Sources & References
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