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Emerging-market stocks experienced their best day in almost a year, driven by new stimulus commitments from the Chinese government and positive economic data from the US. The rally was sparked by China's leaders announcing plans for increased fiscal spending, measures to stabilize the property sector, and rate cuts. Additionally, the US economy showed stronger-than-expected recovery from the pandemic, and jobless claims indicated a resilient labor market. Emerging currencies mostly gained, with the Chilean peso leading the way, while the Mexican peso briefly extended gains after the central bank lowered borrowing costs. El Salvador sovereign bonds performed well, while Ecuador's dollar bonds suffered due to ongoing forest fires and power cuts. Sri Lanka dollar bonds also saw gains as the new president expressed intentions to establish stability before implementing other initiatives. In the Middle East, the shekel and Israeli stocks rose amid diplomatic efforts for a potential truce between Israel and Hezbollah in Lebanon. [Extracted from the article]

Latin American currencies weakened on Wednesday due to a stronger dollar and diminishing optimism about China's stimulus measures. The Mexican and Colombian pesos were particularly affected, dragging down the overall performance of emerging-market currencies. China's recent interest rate cut failed to sustain the rally in commodity prices that had boosted the region's currencies the previous day. The Mexican peso also faced pressure due to US election risks and increased political uncertainty at home. [Extracted from the article]

Emerging-market stocks reached a two-month high due to positive US data on business activity and expectations of further stimulus measures in China. The MSCI index for developing-nation stocks rose, indicating confidence in the US economy's ability to avoid a hard landing. The People's Bank of China's decision to cut the 14-day reverse repurchase rate also fueled speculation of additional measures to boost growth. However, most emerging-market currencies fell against the dollar, limiting demand for risk-sensitive currencies. Brazil's real underperformed due to concerns about the government's spending freeze, while Sri Lanka's dollar notes declined following a leftist candidate's presidential election win. [Extracted from the article]

Sri Lanka and its international bondholders have agreed to keep New York as the governing law for new bonds issued under a $12.6 billion debt restructuring, but have introduced a mechanism that allows creditors to request a change to English or Delaware law. This change was triggered by the proposed Sovereign Debt Stability Act in New York, which would limit investors' recoveries after a debt restructuring. The change in governing law would require a three-step mechanism, and it would be the first time that creditors can initiate a request to change the governing law in sovereign bonds. [Extracted from the article]

El Salvador's sovereign debt has increased after President Nayib Bukele announced that the 2025 budget would not involve issuing new debt, indicating a commitment to fiscal austerity. This move is seen as a crucial step towards unlocking a program with the International Monetary Fund (IMF). The announcement comes after concerns about the government's ability to meet debt payments and the delay in reaching a deal with the IMF due to a lack of fiscal consolidation and the country's adoption of Bitcoin as an official currency. While there is optimism about a potential agreement with the IMF, some investors remain cautious and are waiting for more evidence of fiscal deficit reduction and resolution of the Bitcoin issue. [Extracted from the article]

Emerging markets are at risk due to their increasing reliance on mutual funds and exchange-traded funds, according to a report by the Bank for International Settlements (BIS). The report states that these funds are more sensitive to the US dollar than other investors, and a stronger dollar can reduce foreign investment in local currency assets. While developing countries have reduced their reliance on loans in other currencies and attracted foreign investors, they are now more vulnerable to dollar strength. The BIS suggests that these countries should broaden their investor base to avoid overreliance on mutual funds. [Extracted from the article]

Assets in developing countries experienced a decline due to soft US labor data and concerns about the Chinese economy, leading to a decrease in investors' risk appetite. The MSCI gauge for emerging-market stocks dropped to its lowest level since August, with Asian tech shares contributing to the decline. The US dollar rebounded, causing the currency index to fall. Traders are closely monitoring US data and comments from the Federal Reserve Governor for clues about potential rate cuts. The Brazilian real and Mexican peso, however, saw gains as traders reevaluated the risk of a sudden US economic slowdown. China's core inflation also cooled in August, raising concerns about deflation and global growth. Sri Lanka's dollar bonds sold off due to rising political uncertainties, while Turkey received a credit rating upgrade from Fitch Ratings. In Chile, the government plans to reduce the fiscal deficit next year despite pressure to address crime and fund social programs. [Extracted from the article]

Emerging markets are facing pressure due to soft US labor data and deflation risks in China, which are dampening investor appetite for risk. The MSCI gauge for developing world stocks fell to its lowest level since August, with Asian tech shares leading the decline. China's core inflation also cooled in August, raising concerns about deflation in the country and global growth. Most emerging market currencies weakened against the US dollar, with Colombia's peso hitting its weakest level since October 2023. However, Mexico's peso was an outlier, gaining 0.5% as traders reassessed the risks of a sudden slowdown in the US economy. Sri Lanka's dollar bonds sold off due to rising political uncertainties before upcoming elections, while Turkey received a second credit rating upgrade from Fitch Ratings. [Extracted from the article]

Latin American borrowers are taking advantage of favorable market conditions to issue hard-currency debt, making it the busiest day for bond sales in the region this year. The Uruguayan government, Petroleo Brasileiro SA, BBVA Mexico SA, and Banco de Credito Del Peru are among the entities selling dollar notes. This surge in bond sales is part of a broader trend as bankers return from the Labor Day holiday and investors await US economic data. The borrowing costs for emerging markets have been decreasing, and other companies, such as Corp Andina de Fomento and Sociedad Quimica y Minera de Chile, are also planning to issue new notes. [Extracted from the article]

Top-performing emerging-market bond managers are adjusting their positions in response to an anticipated interest rate cut in the US. Investors are focusing on local-currency debt and select reform stories in countries like Ecuador and Argentina, which are expected to benefit from the rate cut. Despite recent volatility in emerging markets, funds from Pimco, GMO, and Neuberger Berman have outperformed their peers by returning over 16% in the past year. The expectation is that lower US rates will attract more money into emerging markets, potentially triggering a domino effect of capital inflows. [Extracted from the article]

Top-performing emerging-market bond managers are adjusting their positions in anticipation of a significant interest rate cut in the US. Investors are focusing on local-currency debt and select reform stories in countries like Ecuador and Argentina, which are expected to benefit from the Federal Reserve's rate cuts. Despite volatility in emerging markets, funds from Pimco, GMO, and Neuberger have outperformed their peers, returning over 16% in the past year. The expectation is that lower US rates will attract more money into emerging markets, potentially triggering a domino effect of capital inflows. [Extracted from the article]

According to Pacific Investment Management Co., local currency debt from emerging markets will offer the best returns for investors once the Federal Reserve begins lowering interest rates. This is because emerging-market policymakers have been cautious about easing cycles while US rates remained high. However, with the Fed expected to cut borrowing costs next month, investors will seek alternative sources of returns. The asset class has already seen an increase in performance, with emerging-market local currency debt delivering over 2.3% returns in August, the best month this year. Pimco's head of emerging-market debt, Pramol Dhawan, recommends investing in long-term rates in Latin America, as well as currencies and local bonds in countries like South Africa and Turkey. [Extracted from the article]

Latin America's local-currency bonds are experiencing their strongest monthly growth this year as the Federal Reserve moves closer to cutting interest rates for the first time since the pandemic began. This easing is expected to alleviate concerns about a potential US recession that would impact the region, and make it easier for Latin American central banks to loosen monetary policy without causing capital outflows to the US. The shift in sentiment has led to increased bond prices in countries like Mexico, Chile, and Peru. The gains in Latin American local currency bonds have outperformed their Asian and African counterparts, and countries like Colombia, Peru, Brazil, and Mexico have seen their government debt perform well. [Extracted from the article]

Peruvian zinc miner Volcan Cia Minera, which was recently acquired by Argentine group Integra Capital, has announced that 81% of its existing 2026 bonds have been tendered for exchange with ones maturing four years later. The company received $294.7 million of notes from bondholders for the newly issued 2030 bonds. Volcan is now amending the offer to encourage more tenders before the final expiration date of September 6. Shareholders approved the proposal to extend the maturity of the bonds in late July, and the company is obligated to exchange the debt if more than 90% is tendered. [Extracted from the article]

Mexico's peso is experiencing a significant decline, causing disruption for traders who were previously bullish on the currency. Factors such as local politics, the dismantling of carry trades, and concerns about the US economic and political outlook have contributed to the peso's decline. Citigroup, Goldman Sachs, and Barclays have all closed or adjusted their positions on the peso due to these concerns. The peso's decline is a stark reversal from its previous status as the best-performing emerging-market currency. The ruling Morena party's victory in legislative elections and proposed reforms by President Andres Manuel Lopez Obrador have also contributed to investor uncertainty. These concerns have also affected Mexico's stock market, with Morgan Stanley downgrading local equities and Bank of America maintaining a defensive stance. The upcoming change in congress and the possibility of a slowdown in the US economy further add to the uncertainty. However, President-elect Claudia Sheinbaum has reassured investors that the judicial reform should not be a cause for concern. The peso's decline has also affected other currencies in Latin America, leading to increased volatility in the region. Bank of America strategists have advised clients to avoid exposure to Latin America and instead favor trades with weak correlation to global risk. Overall, the current situation suggests that the days of a stronger Mexican peso may be behind us, according to Brad Bechtel, global head of FX at Jefferies Financial Group Inc. [Extracted from the article]

Suriname, a small South American nation, is experiencing a surge in bond performance due to anticipation of an oil windfall. TotalEnergies and APA Corporation are planning to develop deepwater drilling sites in Suriname, which hold approximately 700 million barrels of oil. This has led to a significant increase in bond prices, with investors expecting further gains once TotalEnergies makes a final decision on the project. Suriname has also made progress in fiscal reforms, reducing its debt and implementing measures such as removing fuel subsidies and broadening the value-added tax base. However, there are risks on the horizon, including uncertainty surrounding the upcoming presidential elections in May 2025. Despite these challenges, investors remain optimistic about Suriname's potential oil future. [Extracted from the article]

Fitch Ratings has downgraded Israel's sovereign debt by one notch to A, with a negative outlook, due to the ongoing military conflict and geopolitical risks. Fitch analysts predict that the conflict in Gaza could last until 2025 and potentially expand to other fronts. The rating agency also warns of potential economic damage, increased military spending, and a higher budget deficit. Israel's credit ratings have been under pressure for months, with Moody's downgrading the country's credit rating in February. However, the market reaction to Fitch's downgrade was relatively muted, with small losses in bonds and the currency performing well. Israel's Finance Minister has pledged to pass a responsible budget that supports the needs of the war while maintaining fiscal frameworks and promoting growth. [Extracted from the article]

Fitch Ratings has downgraded Israel's sovereign debt by one notch to A, with a negative outlook, due to the ongoing military conflict in Gaza and heightened geopolitical risks. Fitch predicts that the conflict could continue until 2025 and potentially expand to other fronts. The agency also expects Israel's budget deficit to reach 7.8% of GDP this year and debt to remain above 70% of GDP in the medium term. Moody's Ratings previously downgraded Israel's credit rating in February. Israel's Finance Minister has stated that a responsible budget will be passed to support the needs of the war while maintaining fiscal frameworks and promoting growth. [Extracted from the article]

Emerging-market stocks and currencies experienced gains after Federal Reserve Chairman Jerome Powell hinted at a potential rate cut in September. The MSCI index for developing currencies rose by 0.2%, while stocks saw a 1.2% increase. Analysts predict that Latin American and Asian countries may also begin easing their own rates following the Fed's decision. In other news, Israel's shekel faced a significant decline due to concerns over escalating tensions in the Middle East, and bonds from Venezuela and its state-owned oil company slipped amid speculation about President Nicolas Maduro's inauguration and the legitimacy of the recent presidential election. The International Monetary Fund is also set to make a decision on Sri Lanka's debt sustainability. [Extracted from the article]

Emerging-market equities and currencies have risen as traders expect the Federal Reserve to signal rate cuts in September. The MSCI index for stocks in developing nations saw its biggest increase in three weeks, driven by earnings and a rally in Chinese shares. Additionally, a majority of emerging currencies strengthened against the dollar, driven by the anticipation of a dovish Fed hold and general dollar weakness. Central bankers in Brazil, Colombia, and Chile are also expected to make rate decisions, with Chile forecasted to cut rates and Colombia likely to deliver a half-point drop. However, Israel's shekel experienced a significant selloff due to concerns over the killing of Hamas political leader Ismail Haniyeh and the potential for a broader Middle East war. In Sri Lanka, the International Monetary Fund is concluding its visit to determine if a deal with private creditors is compliant with debt sustainability. [Extracted from the article]

Latin American currencies, including the Mexican peso and Colombian peso, have experienced losses as traders anticipate central bank decisions in both developed and developing economies. Market volatility and the appreciation of funding currencies like the Japanese yen have negatively impacted carry trades in the region. Central bank decisions in countries such as Japan, the US, Brazil, Colombia, and Chile have further increased risks. Mexico's currency has also been affected by concerns over rushed reforms before the new president takes office. In other news, Venezuela's government has cracked down on opposition to President Nicolás Maduro, Israel targeted a Hezbollah commander with an airstrike, and Ethiopia's defaulted eurobonds have risen after securing a deal with the International Monetary Fund. [Extracted from the article]

Developing-nation stocks experienced a 0.5% gain, led by Asian tech companies, as investors anticipate major central bank decisions, economic data, and earnings reports. Latin American currencies underperformed due to weak commodity prices and softer US equity prices. Investors withdrew funds from ETFs heavily invested in Chinese stocks. Monetary policy decisions in the US, Japan, and the UK, as well as GDP data from the euro zone and emerging nations, will provide guidance on the demand for riskier assets. Venezuela's dollar bonds fell amidst political tensions following the disputed presidential election. The International Monetary Fund approved a $3.4 billion funding program for Ethiopia after the country allowed its currency to trade freely. [Extracted from the article]

RBC BlueBay Asset Management, based in London, is seeking to raise an additional $300 million for direct lending in emerging markets. This comes after their successful debut in the emerging-market private lending business three years ago, which has yielded annualized returns of 22% in US dollars. The firm has shown interest in purchasing emerging-market debt from Credit Suisse Group AG. While the private credit industry is struggling with fundraising globally, firms are targeting new markets, including Latin America, due to the high private-credit allocations at some institutional investors. RBC BlueBay argues that select emerging-market deals can offer higher yield and better credit metrics than developed markets. [Extracted from the article]

Guatemala is entering the international capital markets for the first time this year, offering senior unsecured bonds due in seven years and sustainability notes due in 12.5 years. The new government under President Bernardo Arevalo aims to achieve an investment grade credit rating before its term ends in 2028. Guatemala's stable macroeconomic policies and low debt to GDP ratios make its bonds attractive to investors. The deal is being managed by Santander US Capital Markets LLC. [Extracted from the article]

Developing currencies, particularly in Latin America, weakened as the US dollar strengthened. This was attributed to the decline in commodity prices and softer US equity prices. On the other hand, stocks rose, led by Asian tech companies, as risk sentiment improved. The upcoming week is expected to be data-heavy, with major central bank decisions and economic data releases. Additionally, political tensions in Venezuela escalated after President Nicolás Maduro was declared the winner of the election, while Ethiopia's central bank allowed its currency to trade freely to secure funding and debt relief. [Extracted from the article]

Firefighters in California are preparing for hotter and drier conditions that may hinder their efforts to contain a large wildfire. The Park Fire, believed to be started by arson, has doubled in size and is now the largest active blaze in the state. Despite the fire being 12% contained, temperatures are expected to rise again, increasing the risk of extreme fire activity. The fire is one of several wildfires raging across the Western US, and there are concerns that August will bring even hotter and drier conditions. The fire may take weeks or months to fully contain, and Governor Gavin Newsom has secured federal assistance. President Joe Biden has been briefed on the fire and is providing federal support. [Extracted from the article]

Cooler temperatures and higher humidity in Northern California are aiding firefighters in their efforts to control a massive blaze that has burned over 350,000 acres. The Park Fire, believed to be started by arson, has become the largest active fire in the state and one of the largest in California's history. As of Sunday, the fire was 12% contained, and nearly 4,000 firefighters are working to control it. The fire has triggered evacuations and warnings and has damaged or destroyed 71 structures. It is expected to take weeks, if not months, to fully contain. [Extracted from the article]

Bolivia's bonds are now considered some of the riskiest sovereign debt in Latin America due to a failed coup, a currency crisis, strikes, and fuel shortages. The extra yield demanded by investors to hold Bolivia's bonds over similar US Treasuries has increased, surpassing that of Ecuador and Argentina. The country's current account deficits and fixed exchange rate system have depleted its dollar reserves, leading to a shortage of dollars and difficulties in importing fuel and key products. Additionally, a power struggle between President Luis Arce and former President Evo Morales is hindering reform efforts. Despite the announcement of a major natural gas field discovery, Bolivia's bonds continue to decline. The government remains confident in meeting its obligations, but foreign currency reserves are low, and credit rating agencies have downgraded Bolivia due to liquidity pressures and sovereign credit risks. The country's fiscal deficit is expected to remain high, and there are concerns about the government's lack of action to reduce it. However, Bolivia does not have to repay any principal on its debt until 2026. Eventually, a debt restructuring is likely to occur. [Extracted from the article]

Investors are becoming more selective when it comes to emerging-market corporate bonds, as they anticipate a volatile second half of the year. Money managers are recommending high-yield, dollar-denominated bonds from emerging-market firms due to their shorter durations and higher credit quality compared to their host nations. Despite uncertainty surrounding the Federal Reserve's interest rate decisions and the US presidential election, emerging-market corporate bonds have outperformed sovereign bonds this year. Credit quality has also improved, leading to a decline in default rates. Investors are particularly interested in Latin America, with Mexico and Brazil being favored. [Extracted from the article]

The incoming Indonesian President, Prabowo Subianto, has appointed his nephew, Thomas Djiwandono, to a top position at the finance ministry. This move has raised concerns among some investors about the country's fiscal discipline. While some investors are reserving judgment until they see the policies Djiwandono introduces, others see potential declines in Indonesian assets as a buying opportunity. Analysts and investors have varying opinions on the appointment, with some expressing caution and others remaining positive about the country's economic outlook. [Extracted from the article]

El Salvador's President Nayib Bukele may benefit from a potential Donald Trump presidency, according to bond investors. They believe that Trump's return to the White House could help secure funding for El Salvador from institutions like the International Monetary Fund (IMF), which have been hesitant to lend to a country that uses Bitcoin as its official currency. Dollar bonds from El Salvador have already outperformed since June 27, when President Joe Biden's debate performance led investors to anticipate a higher chance of a Trump win. Bukele has had a strained relationship with the US government, but investors see a friendlier face in the White House as a potential catalyst for an IMF deal. However, the IMF has expressed concerns about El Salvador's use of Bitcoin and has asked the country to abandon it if it wants IMF funding. El Salvador's debt burden is around 70% of GDP, and a deal with the IMF would provide further funding tied to economic reforms. [Extracted from the article]

Investors are seeing a potential opportunity in El Salvador's bonds if Donald Trump were to be reelected as president. They believe that Trump's return to the White House could help secure funding for El Salvador from institutions like the International Monetary Fund (IMF), which have been hesitant to lend to a country that uses Bitcoin as its official currency. El Salvador's dollar bonds have already outperformed since June 27, when President Joe Biden's debate performance led to speculation of a Trump win. While El Salvador's president, Nayib Bukele, has had a strained relationship with the US government, a Trump presidency could potentially unlock a deal with the IMF. However, the IMF has expressed concerns about El Salvador's use of Bitcoin and has asked the country to abandon it if it wants IMF funding. El Salvador's debt burden is high, and a deal with the IMF would provide further funding and boost investor confidence. [Extracted from the article]

El Salvador's President Nayib Bukele, who has declared himself the world's coolest dictator, may benefit from a Trump election as it could help unlock funding for the country from institutions like the International Monetary Fund (IMF). Currently, the IMF has been hesitant to lend to El Salvador due to its use of Bitcoin as an official currency. Bond investors see this as a positive trade opportunity, with El Salvador's dollar bonds outperforming since June 27. Bukele has had a rocky relationship with the US government, but a friendlier face in the White House could potentially lead to a deal with the IMF. However, the IMF has expressed concerns about the risks of having Bitcoin as legal tender and has asked El Salvador to abandon it. El Salvador's debt burden is around 70% of GDP, and a deal with the IMF would provide further funding and boost investor confidence. [Extracted from the article]

El Salvador's President Nayib Bukele may benefit from a potential Donald Trump presidency, according to bond investors. They believe that Trump's election could help El Salvador secure funding from institutions like the International Monetary Fund (IMF), which have been hesitant to lend to a country that uses Bitcoin as its official currency. Dollar bonds from El Salvador have already outperformed since June 27, when President Joe Biden's debate performance led investors to adjust for higher chances of a Trump win. Bukele has had a rocky relationship with the US government, but investors see a friendlier face in the White House as a potential catalyst for an IMF deal. [Extracted from the article]

Jamaica's $1.6 billion disaster strategy is being put to the test as Hurricane Beryl approaches the island with winds of over 145 miles per hour. The country has offloaded risk onto credit and insurance markets, including a $150 million catastrophe bond and insurance policies. Other Caribbean nations are also taking steps to protect themselves from climate risks, such as adding clauses to bonds that defer payment in the event of a natural disaster. Jamaica has various contingency plans in place, including a contingency credit, parametric insurance, and access to a precautionary liquidity line. While the country has coverage for about 5% of its GDP, even smaller storms can have an economic impact, particularly on the tourism sector. The storm also poses a threat to Jamaica's economic growth, which has seen 12 consecutive quarters of growth and a decrease in debt-to-GDP ratio. The layers of protection are aimed at preventing the country from falling back into economic instability. [Extracted from the article]

Emerging-market currencies have fallen to a two-month low due to concerns over a potential Trump victory in the upcoming US presidential election. This has led to bets on higher US Treasury yields, outweighing remarks from Fed Chair Jerome Powell about inflation. Traders are worried that Trump's plans to cut taxes and raise tariffs could stoke inflation and force the central bank to maintain restrictive monetary policy for longer. Investors have been buying shorter-maturity US Treasury notes and selling longer-term ones in anticipation of sticky inflation and higher long-term bond yields in another Trump term. [Extracted from the article]

Emerging-market currencies, including the South African rand, Thai baht, and Indonesian rupiah, declined as investors expressed concerns about the potential impact of a Donald Trump presidency. These worries overshadowed positive US job-openings data and Federal Reserve Chair Jerome Powell's dovish remarks. Traders fear that Trump's proposed tax cuts and increased tariffs could lead to inflation and force the central bank to maintain restrictive monetary policies for a longer period. Meanwhile, the Brazilian real weakened against the dollar due to President Luiz Inacio Lula da Silva's criticism of Brazil's central bank. In equity markets, developing nation stocks experienced their largest drop in over a week. El Salvador's sovereign bonds performed well as investors speculated that a Trump victory could increase the likelihood of an International Monetary Fund deal. Chile issued a social bond, and Ukraine officials anticipated concluding restructuring talks for their international debt by August 1. [Extracted from the article]

Developing currencies experienced gains on the final trading day of the first half of the year, which was otherwise weak due to surprise election results and uncertainty surrounding the Federal Reserve's interest rate plans. The South African rand and Chilean peso saw significant increases, leading to a 0.2% rise in the index of emerging-market currencies. However, the index closed the first half down 1%, its worst start since 2022. Election volatilities in major economies like France, the UK, and the US are expected to impact investor risk perception and capital flows in the second half. Despite this, stocks have performed well, with a 6% return over the past six months, the best first half since 2021. The rand experienced a significant rally due to optimism about the formation of a coalition government in South Africa. The Mexican peso also strengthened after the central bank indicated that policy would remain restrictive. Additionally, Indian government bonds are expected to attract significant inflows after being included in JPMorgan Chase & Co.'s emerging market index. [Extracted from the article]

The South African rand has experienced a significant rally due to optimism surrounding the creation of a broad coalition government. This has led to gains in other emerging-market currencies as well. The Mexican peso also strengthened after the central bank indicated that policy will remain restrictive. The emerging-market equities index has also seen gains, with developing stocks on track for the best first-half period since 2021. However, recent election outcomes and upcoming elections in major economies may continue to impact currencies and domestic bonds in the developing world. Additionally, the inclusion of Indian government bonds in JPMorgan Chase & Co.'s emerging market index is expected to attract significant inflows. [Extracted from the article]