August 29, 2026 · Decision research
EM Market Debt Crisis
Finding
The weakest assumption is not that EM markets reopened; it is that reopening proves durable, broad solvency. The evidence supports a real but liquidity-sensitive window with two-speed access, not a clean normalization.
What changed
The flow tape improved at the margin, but it also showed sharp reversals: IIF reports positive July after -$26.6 billion in May and -$17.8 billion in June, while the IMF identifies nonbank funding sensitivity as a structural vulnerability.
Decision
Yes - change the action from a broad "consider EM debt" to a selective, staged consider. Keep exposure possible in liquid, better-buffered issuers; do not make a broad high-yield, frontier, or long-duration allocation now.
Watch next
Require three consecutive positive debt-flow reports, stable spreads through a rate and dollar shock, and refinancing at improving issuer-specific terms. A renewed debt outflow, 50-basis-point spread widening, or failed or materially costlier frontier issuance is a stop signal.