Globally, yields on high-quality assets feel thin once adjusted for inflation and tax. Corporate balance sheets look sound, yet spreads are tight and carry is limited. Under such circumstances, emerging market debt offers a clear payoff profile. There is income and promising potential for capital gains through policy easing, currency strength, and credit improvement. The asset class is broader and deeper than a decade ago, with stronger institutions in many countries and a larger local investor base. That mix supports resilience through shocks.

The International Capital Market Association (ICMA) recently introduced the Climate Transition Bond label under its Principles, to channel capital towards projects that support the decarbonisation of high-emitting sectors, in line with the goals of the Paris Agreement. Representing a logical and necessary evolution in sustainable fixed income markets, the label's success will depend on disciplined execution and investor confidence.

What happens when conflicts far from Europe result in strikes on the continent and threaten European citizens, defence, companies and supply chains? With Iran’s drone attack on a British base in Cyprus, this recent escalation of the conflict demonstrates that Europe can be a target and that the continent’s economic footprint abroad carries direct security consequences. As geopolitical tensions increase and spread, defence continues to move to the centre of Europe’s strategic agenda.