Contents
Market Overview
Macro Update
The longest U.S. federal government shutdown on record (43 days) finally ended this week. The spending package, which was passed by Congress and signed into law by President Donald Trump, will fund the government until the end of January 2026. This initially boosted investment sentiment, but as markets braced for a deluge of delayed U.S. macro data, concerns grew over whether it would support further easing by the Fed. Investors worried that stubbornly high inflation and continued weakness in the labor market could drive a growing divide among Fed officials on further rate cuts. The odds for a third consecutive rate cut in December were down to around 50% from near-certainty before the last Fed meeting.
Both U.S. stocks and treasuries faltered, with the S&P 500 erasing its November gains and the NASDAQ remaining under pressure amid a sell-off in big tech names. Treasury yields climbed across the curve from earlier lows: The 10 and 30-year finished the week around 4.10% and 4.70%, respectively, unchanged from last week. The dollar fell back to 99 on the DXY, having broken through 100 last week for the first time since May. Oil prices were broadly stable with Brent and WTI remaining in the low $60s and high $50s, respectively. Gold resumed its march higher, gaining around 5.0% this week, or about $4,200 per ounce.
In global macro data, Chinese CPI for October came in at 0.2% year-over-year, beating median expectations of -0.1%, but remained subdued, reflecting still lackluster underlying demand dynamics in the economy. Likewise, October Producer Prices (PPI) were also slightly better than expected (-2.1% year-over-year vs. -2.2%) but remained in deflationary territory. October property prices, retail sales, and industrial production softened, keeping investors on the watch for further policy easing.
In the UK, preliminary 3Q GDP fell short of expectations, at 0.1% quarter-over-quarter (vs. 0.2%) and 1.3% year-over-year (vs 1.4%), being held back by cautious households and a softer global economy. The weaker-than-expected dynamics might strengthen the case for a BoE rate cut sooner rather than later, while potentially adding to the challenges for Chancellor of the Exchequer Rachel Reeves ahead of the budget presentation on Nov. 26th. September industrial production also missed expectations significantly, coming in at -2.0% month-over-month, vs. a -0.2% median projection.
In continental Europe, the second reading of 3Q euro area GDP came at 1.4% year-over-year. Germany’s November ZEW investor expectations index fell further, to 38.5, from 39.3 in October and against the median expectation of 41.0. This reflected apparent lower confidence in the capacity of Germany’s economic policy to tackle pressing issues, and reaction to hard economic data, such as industrial production, which have been less convincing than expected. Meanwhile, final October inflation was confirmed as expected, at 2.3% year-over-year.
In terms of geopolitical developments, the USS Gerald Ford, the world’s largest warship, arrived in the Caribbean, in another signal that a military escalation between the U.S. and Venezuela might be on the horizon. The U.S. navy has deployed significant assets in the region close to Venezuela and has recently conducted at least 19 strikes against alleged drug boats, killing dozens of people. Amid growing international concerns about the legality of such operations, Colombia, a prominent regional U.S. ally, announced it will suspend intelligence-sharing with Washington in protest against the Trump administration’s military activities in the Caribbean.
EM Credit Update
Emerging Markets (EM) fixed income returned to positive territory this week as global risk sentiment steadied. EM hard-currency sovereign bonds gained 0.29%, led by high yield (+0.52%), while investment-grade performance was muted (+0.06%). At the index level, spreads tightened 6 bps, driven by an 11 bps contraction in high yield and 3 bps in investment grade.
Regionally, higher-beta areas, such as Africa and Latin America, outperformed, while more rate-sensitive regions, such as the Middle East and Asia, lagged. Bolivia and Ecuador were among the top performers. Bolivian bonds were supported by renewed optimism around multilateral financing and legislative progress on unlocking gold reserves. Ecuador rallied after officials signaled plans to re-enter global markets in 2026 with multilateral backing, reinforcing confidence in the country’s reform trajectory. Senegal was the notable underperformer as IMF discussions concluded without a deal and authorities rejected a restructuring, pushing yields to distressed levels and intensifying concerns around debt sustainability.
EM corporates delivered a modest 0.06% return, with high yield (+0.14%) outperforming investment grade (+0.01%). Index-level spreads tightened slightly by 2 bps, with limited differentiation between investment grade and high yield. C-rated credits outperformed, recovering last week’s losses. From a duration standpoint, the 7–10 year bucket led gains. Sector-wise, pulp and paper underperformed amid mixed signals from London Pulp Week; while some participants anticipate gradual improvement, subdued demand and persistent overcapacity continue to cap sentiment.
Local-currency debt was the strongest segment, returning 1.04%. South Africa (+4.1%), Chile (+2.9%), and Brazil (+2.2%) led performance, supported by softer inflation data, improving fiscal signals, and stronger local rates markets. Türkiye (-0.6%) and the Philippines (-0.1%) lagged on idiosyncratic policy concerns and weaker foreign exchange momentum.
Primary issuance remained active, with 18 new hard-currency deals, two-thirds of which were investment grade. CEEMEA dominated supply (50%), followed by Asia (33%) and Latin America (17%). All LatAm issuance came from Argentina, where corporates are capitalizing on improved sentiment following sovereign-level progress on the political front.
The Week Ahead
In the U.S., the government will work to reschedule economic data releases, and the closely watched FOMC meeting minutes will be published. Markets will also see the ADP payroll preliminary weekly estimate, Empire Manufacturing data, PMIs, the Philly Fed business outlook, and the University of Michigan consumer sentiment survey. Nvidia and Walmart will report earnings.
The eurozone will release October CPI and November PMI, while Japan will publish 3Q GDP, IP, trade, and CPI data. Central bank decisions will be made in China, Indonesia, South Africa, and Hungary. On the political front, Chile will hold its general election on Sunday, in which there is speculation for an ideological turn to the right – as well as a high likelihood of a second-round presidential vote on Dec. 14th. In Ecuador, President Daniel Noboa will seek approval on proposals – including constitutional reform and the allowance of foreign military bases – in a public referendum. In the geopolitical realm, Saudi Arabia’s Crown Prince Mohamed bin Salman will meet with President Trump in Washington, likely deepening ties between the U.S. and Saudi Arabia.
Fixed Income
Equities
Commodities
Source for data tables: Bloomberg, JPMorgan, Gramercy. EM Fixed Income is represented by the following JPMorgan Indicies: EMBI Global, GBI-EM Global Diversified, CEMBI Broad Diversified and CEMBI Broad High Yield. DM Fixed Income is represented by the JPMorgan JULI Total Return Index and Domestic High Yield Index. Fixed Income, Equity and Commodity data is as of Nov. 14, 2025 (mid-day).
Highlights
South Africa’s Medium-Term Budget Buoys Sentiment
Event: South Africa’s minister of finance presented the 2025 Medium-Term Budget Policy Statement, which outlined a deficit of 4.7% of GDP for fiscal year 2025-2026 and 3.8% for FY 2026-2027. It included slightly better revenue performance and a lower borrowing requirement. Debt is expected to peak below 80% of GDP, while real GDP growth is forecasted at 1.2% this year and 1.5% in 2026, in line with market consensus. Lastly, the country’s Treasury adopted a lower, 3% inflation target (+/-100 bps). Local bonds and the rand rallied in the aftermath.
Gramercy Comment: We see South Africa’s current fiscal dynamics, and the Treasury’s backing of the central bank’s implicitly lower inflation target, as constructive. This should help anchor local debt performance, absent evolution of external market drivers and assuming further opportunistic reserve accumulation. The improved growth backdrop, while incremental and from a lower base, combined with resumed gradual fiscal consolidation and a better-functioning coalition government, may lead to positive rating action.
Hungary Loosens Fiscal Stance Ahead of Election
Event: The government of Hungary widened its budget deficit target to 5% of GDP for 2025 and 2026, 30 bps and 50 bps above the current market consensus. This pushed long-end HGB yields and dollar bond spreads higher. Authorities have announced stimulus measures including tax cuts, price curbs, housing support, and wage increases ahead of the April parliamentary elections, in which the ruling Fidesz party has trailed in polls.
Gramercy Comment: The looser fiscal stance ahead of elections is not surprising, but deviation from a path of fiscal consolidation poses credit headwinds given the elevated debt burden of 74% of GDP. This could result in ratings downgrades. We expect local bond yields to maintain a premium into the election, while the Hungarian forint should be better anchored by cautious monetary policy and speculation on potential financial support from the U.S.
Panama Retains Moody’s Investment-Grade Rating
Event: Moody’s affirmed the government of Panama’s credit rating at Baa3 and maintained a negative outlook.
Gramercy Comment: Panama’s sovereign rating review by Moody’s was widely anticipated by investors to be a downgrade, which would have marked the loss of an investment-grade rating from the second of the three major rating agencies. That move could have led to potential “forced selling” of government bonds. However, Moody’s decision to affirm the rating comes as a relief to market participants and offers the Mulino administration a renewed opportunity to deliver the necessary fiscal and macroeconomic reforms. Moody’s has called for structural measures to control spending and strengthen the credibility of fiscal policy. As the ratings agency put it, “although authorities have reduced the fiscal deficit in 2025, additional government actions are needed to achieve faster and more effective fiscal consolidation to reverse the rising debt trend, in line with government plans.”
Looking ahead to next year, we see balanced risks for Panama’s credit trajectory and performance. We expect the Mulino administration to continue pushing forward with its reform agenda. However, we recognize his agenda may hit political obstacles and experience difficulty with implementation. In that context, constructive cooperation with the legislature will be essential for advancing the fiscal consolidation measures needed to maintain the investment-grade rating.
Emerging Markets Technicals
Emerging Markets Flows
Source for graphs: Bloomberg, JPMorgan, Gramercy. As of Nov. 14, 2025.
For questions, please contact:
Kathryn Exum, CFA ESG, Director, Co-Head of Sovereign Research, [email protected]
Petar Atanasov, Director, Co-Head of Sovereign Research, [email protected]
This document is for informational purposes only. The information presented is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Gramercy may have current investment positions in the securities or sovereigns mentioned above. The information and opinions contained in this paper are as of the date of initial publication, derived from proprietary and nonproprietary sources deemed by Gramercy to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. This paper may contain “forward-looking” information that is not purely historical in nature. Such information may include, among other things, projections and forecasts. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this paper is at the sole discretion of the reader. You should not rely on this presentation as the basis upon which to make an investment decision. Investment involves risk. There can be no assurance that investment objectives will be achieved. Investors must be prepared to bear the risk of a total loss of their investment. These risks are often heightened for investments in emerging/developing markets or smaller capital markets. International investing involves risks, including risks related to foreign currency, limited liquidity, less government regulation, and the possibility of substantial volatility due to adverse political, economic or other developments. References to any indices are for informational and general comparative purposes only. The performance data of various indices mentioned in this update are updated and released on a periodic basis before finalization. The performance data of various indices presented herein was current as of the date of the presentation. Please refer to data returns of the separate indices if you desire additional or updated information. Indices are unmanaged, and their performance results do not reflect the impact of fees, expenses, or taxes that may be incurred through an investment with Gramercy. Returns for indices assume dividend reinvestment. An investment cannot be made directly in an index. Accordingly, comparing results shown to those of such indices may be of limited use. The information provided herein is neither tax nor legal advice. Investors should speak to their tax professional for specific information regarding their tax situation.