EM Fixed Income: Navigating some sudden market turbulence

EM local markets are underperforming credit and corporates as a potential US diesel export ban compounds a reflationary, rising-core-yield backdrop.

• Local markets sold off hard: GBI-EM local index down over 2% since late-August peak, giving back more than half of 2026 YTD gains as EMFX and rates both weakened.
• Diesel export ban is the catalyst: A potential U.S. diesel export ban added risk premia beyond the existing reflationary/US-strength backdrop; Chile, Peru, South Africa, Philippines and Mexico flagged as most exposed via refined-product import reliance.

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