Emerging Markets Strategy Weekly: Scores on the Doors

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Emerging Markets Strategy Weekly: Scores on the Doors

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02 Jul 2026 13:55:08 ET │ 38 pages

Emerging Markets Strategy Weekly

Scores on the Doors

CITI'S TAKE

Luis E Costa, CFA AC

On YTD cumulative total return basis, EM local currency bonds have +44-20-7986-9757

continued to outperform USTs, underscoring the relative attractiveness of luis.costa@citi.com

carry and selective FX tailwinds across the region. Within EM, LatAm

remains the clear winner, supported by robust contributions from both Rohit Garg AC

duration and FX returns, while CEEMEA tracks closely with broadly solid +65-6657-3471

performance. Asia has lagged, reflecting persistent external headwinds and rohit.garg@citi.com

sustained upward pressure on USD despite oil prices coming down, which

has weighed on FX returns. The resilience of local currency assets in Donato Guarino AC

CEEMEA and LatAm should persist, in our view, supported by a relatively +1-212-723-3298

less accommodative stance that sustains high real yields alongside ample donato.guarino@citi.com

FX reserve buffers that help mitigate external shocks.

Bhumika Gupta AC

Asia — We provide an update on portfolio flow dynamics in Jun’26 and elaborate on +44-20-7986-5933

observations. bhumika1.gupta@citi.com

Alexander Rozhetskin ACCEEMEA — In Turkey, we reinitiated the carry trade this summer (link), this time

using the front-end bonds. We think the CBT’s reaction function is skewed dovish, +44-20-7508-4787

with CPI this week closely watched. Nigeria remains a high-conviction call for us, alexander.rozhetskin@citi.com

driven by elevated oil prices that have exceeded our initial forecasts. The effective AC Ivan Riveros,CFApolicy anchor remains around the OMO/SDR rate, but the Q3 bond auction calendar

reveals increased issuance.