T. Rowe Price Warns $90 Oil, Loose U.S. Fiscal Policy Could Pressure EM Debt
Samy Muaddi, T. Rowe Price’s EM fixed-income head, warns that Brent crude above $90 and looser U.S. fiscal policy risk driving core rates higher and spilling into emerging-market bond yields despite solid EM fundamentals. The firm remains cautiously exposed to select EM local currencies while awaiting geopolitical clarity.
1. EM Debt Outlook
Samy Muaddi highlights that emerging-market debt fundamentals remain strong due to prudent fiscal and monetary policies, but he cautions that sustained Brent crude above $90 and expanded U.S. fiscal deficits could push core interest rates higher, increasing volatility and pressuring EM bond yields.
2. Tactical Portfolio Positioning
T. Rowe Price is maintaining cautious exposure to select EM local currency and interest-rate markets, having trimmed riskier positions prior to the recent geopolitical escalation and positioning to re-enter more broadly once clarity around the Middle East conflict reduces uncertainty.