Emerging market (EM) debt produced positive overall returns in Q3 in USD terms, albeit with bouts of volatility, in particular with a risk-off wave seen in the last weeks of September. Towards the end of the quarter, there were increasing signs of a second wave of infection in some EM regions, with a tightening in lockdown measures imposed in its wake. Economic surprises were broadly positive throughout Q3 for most EM economies, and consensus expectations across the globe – from the US to EM economies – have been revised higher for 2020 growth. The strong rebound recorded by China’s economy, a swift recovery in US employment, Europe’s ability to find a common policy response, and promising progress for a COVID vaccine all point to a continuation of the global recovery, lending a positive environment for EM assets. US elections present a key near-term risk, and the EM complex may experience further volatility in the final quarter of the year. EM valuations still screen as attractive in a yield-starved world, and extremely accommodative global monetary policy conditions in response to the pandemic’s impact seem to have pushed capital back into EM, as witnessed by steady inflows into EM-dedicated funds over the quarter, particularly in the hard currency space.