EM Corporate Weekly Monitor: Spreads stable into high summer amidst heatwaves and headlines galore

Research evidence excerpt

J P M O R G A N

Global Credit Research

07 August 2026

EM Corporate Weekly Monitor

Spreads stable into high summer amidst heatwaves

and headlines galore

As we move deeper into the summer, credit market activity is slower in

both primary and secondary, but headlines continue to be dominated by

US rates/Fed expectations, Middle East conflict/oil prices, and

developments around AI/hyperscalers. At the same time, heatwaves are

gripping various parts of the world, with drought conditions causing water

shortages and falling river levels that are in turn affecting agriculture,

transportation, and electricity generation.

Credit markets remain relatively stable as CEMBI BD spread is -3bp

tighter so far this week, reversing the widening from last week amidst a 5-6bp

decline in UST yields which enabled a WTD return of +0.38%.

We think spreads are likely to move modestly wider near term given the

further decline in UST yields following the US employment report, but still

expect CEMBI to remain in the 160bp to 170bp range maintained over the

past 3 months. Total returns should stay positive supported by rates, which has

been the case in all weeks this year when UST yields came down.

CEMBI BD IG (-5bp YTD) and HY (-42bp YTD) spreads have

outperformed US HG (+2bp YTD) and HY (-10bp YTD), respectively,

narrowing the basis, and we think such compressed levels can be

sustained. The spread of CEMBI BD IG has been converging towards US HG,

and we think the increased issuance from US hyperscalers is accelerating the

narrowing of the basis (link).

CEMBI BD HY headline spread at 294bp is now 10bp inside of US HY and

has consistently traded inside US HY since early June. However, CEMBI

BB and B are still wider than the respective US segments, with the headline

spreads affected by compositional differences. Indeed, almost all regional

CEMBI BB and B segments are wider than US comparables.

Potential catalysts: Macro – US CPI (8/12), Argentina CPI, Peru rates (8/13),

Euro area GDP (8/14). Earnings – Embraer, Movida, Hidrovias do Brasil,

Natura, Bancolombia/Cibest, JSL, JBS (8/10), BTG Pactual, YPF, Banco

Davivienda, Falabella, B3, Adecoagro, Banco Votorantim (8/11), CSN,

…