EM Corporate Weekly Monitor: Markets mostly unfazed by geopolitical tensions

Research evidence excerpt

EM Corporate Weekly Monitor: Markets mostly unfazed by geopolitical tensions

Yang-Myung Hong AC Global Credit Research

(1-212) 834-4274 10 July 2026 J P M O R G A N

ym.hong@jpmorgan.com

Market Strategy

The US-Iran conflict came to the forefront again this week as news of strikes and

attacks on ships in the Strait put into question the ceasefire deal, but credit spreads

were overall well behaved as rates rose with a rebound in oil prices. Despite some

limited re-escalation, talks between the US and Iran are reportedly continuing with the

goal of reaching a more permanent peace deal. Nevertheless, oil prices rebounded 6-7%

to the mid to high $70s/bbl as traffic through the Strait has likely fallen, though another

factor is the tightness in product prices due to disruptions in Russia refining capacity

(link). Markets seemed unfazed overall as the 4-6bp rise in UST yields was partially

offset by spread tightening and equities were balanced with small gains in DM and

losses in MSCI EM mainly driven by the tech sector.

EM corporates outperformed other credit asset classes this week as CEMBI BD

spread tightened -4bp to 160bp to offset most of the rate move and post marginally

negative WTD return of -0.06%. This is better than EMBIG Div. ( -1bp to 197bp, -

0.22%) and GBI-EM GD (-0.44%), while CEMBI BD IG (-3bp to 94bp, -0.12%) held

up better than US HG (+1bp to 88bp, -0.43%) and CEMBI BD HY (-7bp to 294bp,

+0.03%) was broadly in line with US HY (-5bp to 304bp, +0.05%). Within CEMBI, the

commodity sectors diverged as oil & gas (-10bp to 173bp, +0.01%) benefited from the

rise in oil prices whereas metals & mining (+3bp to 157bp, -0.35%) was the only sector

to widen.

The geopolitical tensions are likely to be an ongoing feature until there is a