FX & EM Strategy: There are at least three reasons why rising real carry on EM FX has not led to stronger EM currencies this year. Growth differentials have been in favour of USD versus EM, a strong DXY and higher US shadow short rates. We continue to hold a bullish USD and bearish EM FX view.

Sovereign Credit Strategy: We stay bearish, favouring IG over HY, including selling EM CDX. We look at 10s30s credit curves, which have steepened significantly unlike US IG credit. While increased long-end supply and worse credit metrics suggest that some of this move is structural, we find several opportunities across credits, including after adjusting for debt levels. SOAF, EGYPT and DOMREP are very steep and likely to reverse, making flatteners attractive. We suggest buying SOAF 2047 vs. SOAF 2030. ADGB, QATAR, KSA, RUSSIA, OMAN, JORDAN, URUGUA, MEX and COSTAR are also steep, which makes positioning in the long end attractive, even if there is no immediate catalyst to flatten back. PERU looks way too flat and should steepen from here.

In LatAm HY, we review recent events which reinforce our Argentina like but make us remove our like on El Salvador despite wider levels.

LatAm Macro Strategy: We stay short BRL, CLP, MXN versus USD, and add COP longs versus ZAR given diverging valuations and terms of trade dynamics. We extend the target on our 10y COPxIBR payer to 6.80% and add 5y swap spread longs in Chile amid higher Senate rejection chances of a fourth AFP withdrawal.

Short belly breakevens in Mexico at 5.00% and long 2y real rates in Brazil at 4.25% would look more compelling.

Asia Macro Strategy: The slowdown in China this time is different. We like IDR and INR while we stay bearish on KRW, TWD and THB. We are long CNH versus TWD and EUR. In rates, we like 10yr IGBs, 10yr CGBs, 5yr MYR NDIRS and 1s10s KRW flatteners. This week, we look into the upcoming global bond index inclusion of India and summarise our note on China's green bonds.

CEEMEA Macro Strategy: We remain positioned for higher core yields and a stronger USD. We added a long USD/TRY position in Turkey as well as like paying 5y HUF IRS. We keep our 2s5s PLN steepener and short PLN/HUF. In Russia, we continue to hold a constructive view on local assets and keep our short EUR/RUB and long 10y OFZs vs. 10y USTs positions. We added short ZAR/COP and recently closed our long SAGB 2041s.

The Quant Angle: September 22 EUR/USD O/N implied vols are at ~10%, practically matching what the currency realised the day of the June FOMC meeting as the dot plot surprised Fed watchers. This suggests that the market is expecting an eventful FOMC, coinciding with USD sentiment improving recently.