EM Fixed Income: Emerging Markets Outlook and Strategy: Hold Reduced EM Exposure into the Summer

• Uncertainty surrounds the implementation of reciprocal tariffs and fentanyl-based tariffs under the IPA Act, with a federal court hearing scheduled for July 31st.
• The average tariff rate for ASEAN economies is currently around 9%, but could increase significantly if threatened tariffs are implemented, possibly exceeding 20%.
• The impact of these tariffs on EM economies and inflation remains uncertain, leading to a less stable macroeconomic landscape in the second half of the year.

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