"If you're hunting for yield in 2026, emerging market bonds just became more interesting. The iShares J.P. Morgan USD Emerging Markets Bond ETF ( NYSEARCA:EMB) offers a 5.5% dividend yield as the asset class experiences a fundamental shift. The fund delivered 13% returns in 2025 but has gone quiet in early 2026, up just 0.07% year-to-date. That pause might not last."
"While EMB holds 658 emerging market bonds across dozens of countries, the Venezuela situation illustrates a broader truth: political risk that seemed permanent can evaporate overnight, unlocking value income investors had written off. The biggest factor for EMB in 2026 is the Federal Reserve's rate trajectory. Emerging market bonds historically rally when the Fed pivots dovish, and expectations are building for additional rate cuts this year."
EMB, the iShares J.P. Morgan USD Emerging Markets Bond ETF, yields 5.5% and returned 13% in 2025 but is up only 0.07% year-to-date in early 2026. A surge in Venezuela's defaulted bonds to 43 cents on the dollar after President Nicolás Maduro's surprise removal illustrates how political reversals can rapidly restore value. Emerging market debt often benefits when the Federal Reserve eases, and market forecasts project additional rate cuts in 2026. Falling US Treasury yields would make EMB's yield comparatively attractive and could trigger institutional inflows. Investors should monitor FOMC statements and economic projections that influence emerging market bond pricing.
Read at 24/7 Wall St.
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