Top of the Morning: Emerging Markets - Fed hikes matter, but global liquidity matters more

UBS's CIO for emerging markets sees Fed hikes as secondary to favorable global liquidity, keeping EM equities and bonds attractive despite tightening.

• EM equities outperforming: Up over 25% in USD in 2026 YTD, almost double the S&P 500, per Alejo Czerwonko.
• Earnings and valuation support: EM earnings growth pegged at ~60% this year, ~20% next year, with equities trading at ~10x forward earnings vs. a 10-year average of 12.5x.

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