Should major developed economies indeed be able to shift from higher to lower interest rates, this would reduce market uncertainty and volatility in the months and quarters ahead, including for emerging market bonds.

There were significant outflows from EM assets as investor tolerance of risk withered and the US dollar strengthened amid growing concerns over the impact of higher inflation, rising interest rates, and a poor outlook on global growth. However, with confidence now growing that major central banks have succeeded in taming inflation without causing a hard recessionary landing, we expect flows to accelerate back into EM.

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