JPMorgan Chase & Co. reduced its overweight recommendations on emerging-market currencies and local bonds after the US attack on Iran heightened geopolitical risks. Strategists led by Jonny Goulden, Anezka Christovova, and Arindam Sandilya noted that while emerging markets reacted negatively, the limited response presented an opportunity to trim exposure.

They halved their overweight positions on emerging-market currencies and bonds, citing high positioning in EM FX, priced-in rate cuts, and expensive credit markets. The MSCI benchmark for developing currencies dropped 0.9%, with the Hungarian forint and Polish zloty falling most sharply. JPMorgan also slashed bullish calls on the Hungarian forint and Turkish lira by half.

The bank maintains marketweight recommendations in sovereign and corporate credit while keeping an underweight position in the Middle East. However, strategists remain bullish on Latin American currencies and rates, which are less exposed to oil price volatility and have stronger carry buffers.