Wall Street Maintains Bullish Emerging-Markets Outlook for 2026

Major Wall Street banks are gearing up for another strong year in emerging markets, predicting that dollar weakness and the investment explosion in artificial intelligence will offer a further boost to the asset class.

Those tailwinds are expected to add to this year’s gains in emerging markets, with bonds in local currencies handing investors a 7% return, the best since 2020, and a currency gauge up more than 6%. The rally should extend, underpinned by the likelihood of more Federal Reserve interest-rate cuts as the US economy slows, according to Morgan Stanley strategists.