Deutsche Bank: Emerging market local currency fixed income is expected to have an "extraordinarily strong" year ahead.

Analysts at Deutsche Bank stated in a report that this year has been an "extraordinarily strong" year for emerging market local currency fixed income, with the potential for even stronger performance next year. They said that the unhedged portion of the fixed income sector is expected to achieve the strongest total returns in 15 years, with returns this year possibly exceeding 15% in US dollars. They also noted that the hedged portion is expected to achieve a return of over 5% for the third consecutive year. The analysts said, "While achieving double-digit total returns for multiple years in a row is relatively rare; we remain optimistic about the prospects for emerging market fixed income in 2026, with greater differentiation being key."