CAN EM FIND ITS MOJO OVER SUMMER?

While the ‘transitory’ versus ‘permanent’ inflation debate in DM is unlikely to be settled anytime soon – and yesterday’s U.S. CPI print does little to swing the needle either way – but absent an early Fed shift in tone next week, global bond and F► volumes are set to push lower further as the calendar shifts to Jackson Hole. Meanwhile, EM local bond returns (GBI) have clocked 6%+ already this quarter and are set to push toward the 10%+ returns last seen in the final two months of 2020. Flows into EM local bond funds (ex-China) tend to follow performance more closely than other asset classes.