Fed fog: Macro Wrap

Research evidence excerpt

Fed fog: Macro Wrap

Barclays | Macro Wrap

Asset Class Region Key views

Koruna weakened on USD strength but seen stabilising with upside

retracement risk, expected to outperform zloty (short PLNCZK), with

continued value in receiving 10y CZK IRS vs EUR.

Broadly constructive on local duration with selective opportunities (e.g.

Czech long-end), but expect spreads to widen versus the US from currently EM Rates tight levels as a higher-for-longer Fed, narrowing USD premium, and

uneven domestic backdrops across EM drive differentiation.

El Niño is likely to drive climate volatility in the months ahead, though

food inflation could be muted in the near term, giving EM rates a breather. EM Credit In EM credit, we are focused on hydropower-reliant countries facing a one-

two punch into 2027.

Spreads remained resilient, especially for investment grade, even as

US Credit supply continued to run hot and equity volatility picked up. Strong

fundamentals should help keep spreads range-bound near recent tights.

Macro easing and softer inflation support near-term credit, but supply

dynamics dominate. We expect summer stability, with spreads drifting European Credit wider later as issuance resumes and trade risks re-emerge. Prefer cash

carry, hedged with CDS.

AI-led demand continues to favour regional technology enablers, pick-

and-shovel plays, and commodity producers benefiting from supply-chain

resilience and energy transition trends. For Korea, SK hynix’s Asia Credit fundamentals remain strong, with AI-driven demand outstripping supply

and sustaining pricing power. This is feeding into China TMT, where rising

memory costs are a growing margin headwind for downstream hardware.

The recovery in oil flow through the Strait of Hormuz has been very strong,