EM Sovereign Credit Strategy: Spreads come un-stuck, but not a regime shift

This is J.P. Morgan's EM Sovereign Credit Strategy report. We stay MW on EM sovereign credit: rate volatility has finally interrupted the 2026 spread resilience, but we view the recent widening as more of a wobble than a regime shift. Absent a growth shock, spreads should remain broadly stable even if near-term volatility persists. The key macro trigger has been rates (and oil) via volatility, not levels. UST 10y breaking above 5% drove a sharp episodic widening, with EMBIGD widening 15bp on 1 October 2026;