Emerging markets (EM) credit continued their recovery in July, supported by strong investor sentiment. Sovereign and corporate spreads tightened by 23 and 25 basis points, respectively, driven by progress in global trade negotiations and easing tensions in the Middle East. Risk appetite was further boosted by the U.S. signing trade agreements with key partners such as Indonesia, the Philippines, South Korea, and the EU. However, markets were surprised by a sharp tariff increase on Brazil, raising concerns over political motivations. Monetary policy across EMs remained mixed. While some central banks held rates steady, Turkey continued its easing cycle, cutting rates by 300 basis points amid falling inflation. In developed markets, U.S. Treasury yields rose, with the 10-year yield up 15 basis points, reversing June’s decline.