We often take advantage of tactical opportunities in high-inflation players like Argentina, Egypt and Turkey - but over the past half decade our own more fundamental FX carry and local fixed income portfolio has been dominated by five markets: Brazil, Colombia, Indonesia, Mexico and South Africa. What do all of these countries have in common?

Simple: they all have "aspirational" inflation targets. I.e., central banks who actively pursue DM-adjacent inflation benchmarks that are meaningfully lower than their historical average inflation rate - despite the fact that they are mostly lower-income, low-saving commodity exporters who are unlikely to achieve those benchmarks on a sustained basis in practice.

This in turn puts upward pressure on real rates, downward pressure on growth and increased external support for currencies. One still has to watch the local cycle, market positioning and broader commodity movements, of course, but there's a reason we concentrate our firepower here.