BlackRock and JPMorgan Bet on EM Bonds as Rate-Cut Cushion Drives Outperformance

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‼️ BlackRock and JPMorgan are increasing allocations to emerging-market bonds as local-currency EM debt has returned over 3% this year, outperforming US Treasuries and European peers which are down 0.6%. With inflation in developing economies averaging just 3.8%—roughly one-third of 2022 shock levels—EM central banks now have about 1 percentage point more policy cushion to absorb price pressures, enabling recent rate cuts in Brazil, Turkey and Hungary. BlackRock is also positioning in bonds where it expects central banks to hold rates steady, betting on policy divergence and relative stability as key drivers of outperformance.

AI Boom Fuels Record $3.9B Bond Inflows as Malaysia Cements Data-Center Crown

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‼️ 🇲🇾 Foreign investors poured a record $3.9 billion into Malaysia’s government and corporate bonds in August—the largest monthly inflow since Bank Negara Malaysia’s data began in 2016—as the country cements its role as Southeast Asia’s leading data-center hub, drawing multibillion-dollar commitments from Oracle and Amazon.  The surge in fixed-income demand is also underpinning the ringgit, which gained more than 1% in August to rank among Asia’s top-performing currencies.

China’s Home-Sales Overhaul Deepens Local Government Funding Crunch

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‼️ 🏠 🇨🇳 China’s shift away from preselling homes toward completed-property sales could deepen pressure on already strained local government finances, Goldman Sachs economists warned. The change may further limit cash-starved developers’ ability to purchase land, prompting Goldman to raise its forecast for land-sale revenue declines to 30% from 20%. Local-government land-sale proceeds had already fallen 30.8% year-to-date through July, reaching 1.2 trillion yuan ($179 billion)

BlackRock and JPMorgan Bet on EM Bonds as Policy Room Fuels Outperformance

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‼️ BlackRock and JPMorgan are increasing allocations to emerging-market bonds as local-currency EM debt has returned over 3% this year, outperforming US Treasuries and European peers which are down 0.6%.  With inflation in developing economies averaging just 3.8%—roughly one-third of 2022 shock levels—EM central banks now have about 1 percentage point more policy cushion to absorb price pressures, enabling recent rate cuts in Brazil, Turkey and Hungary.  BlackRock is also positioning in bonds where it expects central banks to hold rates steady, betting on policy divergence and relative stability as key drivers of outperformance.

Treasury Unveils 2–5× Bond Buyback as Markets Brace for Friday’s Inflation Showdown

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‼️ On Wednesday, the Treasury is scheduled to announce details of a bond buyback to be conducted the next day, under an expanded plan for at least double the original maximum amount — with multiples of three to five considered possible. Then Friday brings fresh data on inflation, which Warsh and his colleagues have suggested will be crucial in determining whether the Fed hikes interest rates later this month