Emerging Market Bonds Poised for Strong Performance in 2026 Amid Weakening Dollar and Easing Monetary Policy

Emerging market bonds had a strong year in 2025, gaining 2.88% in the quarter, compared to the overall fixed income market. A weakening dollar and easing monetary policy in the US could continue to support EM bonds in 2026. ETFs like Vanguard Emerging Markets Government Bond ETF (VWOB), VanEck Vectors Emerging Markets Local Currency Bond ETF (EMLC), and iShares J.P. Morgan USD Emerging Markets Bond ETF (EMB) can capture broad EM exposure. Active EM bond ETFs like SPDR DoubleLine Emerging Markets Fixed Income ETF (EMTL) and Global X Emerging Markets Bond ETF (EMBD) use bottom-up research and sovereign macro overlays to identify opportunities in the market.