Global EM Strategist: Plot Twist, But No Change In View

Research evidence excerpt

Global EM Strategist: Plot Twist, But No Change In View

Global Idea

June 22, 2026 05:21 PM GMT

Morgan Stanley & Co. International plc+MGlobal EM Strategist James K Lord

Strategist

Plot Twist, But No Change In James.Lord@morganstanley.comMorgan Stanley & Co. LLC +44 20 7677-3254

Simon Waever

StrategistView Simon.Waever@morganstanley.com +1 212 296-8101

Ioana Zamfir

A new Fed doesn’t mean a new bear market for EM. We Strategist

Ioana.Zamfir@morganstanley.com +1 212 761-4012

continue to expect EM currencies to rally vs G3, as risk appetite Emma C Cerda

remains strong, lower oil prices are helping and fundamentals & Strategist

Emma.Cerda@morganstanley.com +1 212 761-2344

policy are improving. FX strength should help a recovery in Sofia Palacios

bonds through more dovish CB pricing. StrategistSofia.Palacios@morganstanley.com +1 212 761-0428

Morgan Stanley & Co. International plc+

Key Takeaways Neville Z Mandimika

EM local currency bond yields have not fallen as much as the drop in energy Neville.Mandimika@morganstanley.com +44 20 7425-2509

prices might suggest. Arnav Gupta

Higher core rates, a strong USD and continued market pricing for rate hikes at the StrategistArnav.Gupta@morganstanley.com +44 20 7677-0382

index level have limited the duration rally.

Morgan Stanley Asia Limited+

Some of these headwinds should fade as we generally expect rate cuts from EM Gek Teng Khoo

over the next 12m, not hikes, and are bullish EM currencies at least vs G3. Gek.Teng.Khoo@morganstanley.com +852 3963-0303

ZAR and HUF offer opportunities for investors looking to monetise rates risk Morgan Stanley India Company Private Limited+

premia. Nimish M Prabhune

EM FX continued to deliver positive total returns in June again G3 and we Nimish.Prabhune@morganstanley.com +91 22 6996-1862