EMEA EM Local Markets Compass: "Reflation lite" rather than "goldilocks" - add OW SAGBs in the GBI-EM Model Portfolio, stay OW EMEA EM FX

Research evidence excerpt

EMEA EM Local Markets Compass: "Reflation lite" rather than "goldilocks" - add OW SAGBs in the GBI-EM Model Portfolio, stay OW EMEA EM FX

J P M O R G A N Global Markets Strategy

16 July 2026

EMEA EM Local Markets Compass

“Reflation lite” rather than “goldilocks” - add OW SAGBs

in the GBI-EM Model Portfolio, stay OW EMEA EM FX

Emerging Markets Strategy

Anezka Christovova AC

(44-20) 7742-2630

anezka.christovova@jpmorgan.com

Michael Harrison AC

• Medium-term lower oil price expectations are bullish for EMEA EM local (44-20)michael.p.harrison@jpmorgan.com7134 5720

markets, but near-term oil price volatility persists. This requires caution but

Shaun Daly AC also offers opportunity.

(44-20) 7134-0776

• In rates, we are inclined to fade sell-offs to add selectively bullish positions. In shaun.daly@jpmorgan.com

FX, where we have been more broadly bullish, we make no changes for now, Paul Bo-Yang Sheng AC

with near-term US yield developments likely driving more of the price action. (44-20) 3493 9297

paulbo-yang.sheng@jpmorgan.com

• July FOMC meeting carries considerable event risk, but risk-reward seems J.P. Morgan Securities plc

asymmetrically skewed to bullish EMEA EM outcomes if the Fed is more

dovish than expected given the already substantial repricing in US rates.

• EMEA EM inflation keeps surprising to the downside and forward-looking

growth projections remain solid, but a risky external backdrop and sticky core

inflation trends make us reluctant to call the environment “goldilocks”.

• We see this backdrop as closer to “reflation lite”.

• For FX, as long as there is growth, there isn’t much difference between

goldilocks and reflation lite. For rates, reflation lite over goldilocks argues

more for HY-LY risk premia compression than just receiving everything.