EM Credit Weekly: Still engaged despite resurface in geopolitical volatility

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EM Credit Weekly: Still engaged despite resurface in geopolitical volatility

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23 Jul 2026 11:46:37 ET │ 13 pages

EM Credit Weekly

Still engaged despite resurface in geopolitical volatility

CITI'S TAKE

Donato Guarino AC

We remain engaged on EM credit despite elevated geopolitical noise and +1-212-723-3298

tight valuations. While tensions in the Middle East continue to drive donato.guarino@citi.com

volatility across energy and rates markets, we believe the broader macro

backdrop remains supportive. Our base case is that oil prices should Alexander Rozhetskin AC

gradually moderate as long as supply disruptions remain limited, while +44-20-7508-4787

softer U.S. inflation and a cooling labor market should allow the Fed to alexander.rozhetskin@citi.com

adopt a less restrictive stance over time. Recent inflation pressures have

been driven more by refined product bottlenecks than by crude oil itself, Luis E Costa, CFA AC

reinforcing our view that the current energy shock is unlikely to generate a +44-20-7986-9757

sustained inflation cycle. Against this backdrop, we continue to favor luis.costa@citi.com

earnings carry and view periods of spread widening as opportunities to add

exposure rather than reasons to turn defensive. Nikola Apostolov AC

+44-20-7986-6499

Argentina getting another upgrade — We remain Overweight Argentina. Moody’s nikola.apostolov@citi.com

decision to upgrade the sovereign to B3 with a Positive Outlook reinforces our

constructive view and brings all three major rating agencies—Moody’s, S&P, and

Fitch—into alignment at the B-/B3 equivalent level. This alignment removes an

important technical hurdle for a broader universe of institutional investors whose

mandates require a minimum rating from all three agencies.