Emerging market bond volumes have fallen every quarter of 2026 and trade counts are down by more than a quarter, according to MarketAxess data — a decline with no parallel in the US or European credit markets.
Emerging market bond trading has thinned steadily through 2026, and by three separate measures it is now the weakest of the five major credit markets tracked by MarketAxess.
Weekly volumes averaged $42.9bn in the first quarter, $33.6bn in the second and $29.6bn across July. The week ending 19 July recorded $26.6bn, the lowest of the year and 29% below the year-to-date weekly average of $37.4bn. Trade counts have fallen further and faster, from a first-quarter average of 32,957 a week to 24,068 in July.
Source: MarketAxess
When The DESK last examined credit trading costs in January, emerging markets were at their most liquid point of the year.
Weekly volumes that month averaged $47.2bn, and the week ending 25 January produced the tightest EM bid-ask spread of 2026 at 0.1448 price % of par. Volumes have not returned to that level since, and July’s average stands 37% below it — a steeper fall than European high yield (-32%), European investment grade (-26%), US high yield (-14%) or US investment grade (-5%) over the same period.
Fewer trades, not smaller ones
The composition of the decline distinguishes emerging markets from Europe. EM average trade size has held largely firm, easing from $1.30m in the first quarter to $1.23m in July, a fall of 5%. Trade counts over the same period dropped 27%.
That combination points to reduced participation rather than reduced risk appetite among those still trading: fewer transactions, but transactions of a broadly unchanged size. European investment grade, by contrast, has seen both measures contract together, with average trade size down from a January peak of €937k to €685k in the week ending 19 July.
Emerging market tickets remain by far the largest in the dataset. July’s $1.23m average compares with $811k in European high yield, $711k in European investment grade, $676k in US high yield and $410k in US investment grade. A market losing transactions while retaining institutional-scale tickets is a different problem from one whose tickets are shrinking, and it carries a different implication for execution: the trades that do come to market remain large relative to the flow available to absorb them.
The one market that has not fully repaired
Credit markets widened sharply in March after the start of Gulf war hostilities and the recovery since has been uneven. Emerging markets have reversed only 64% of that widening, against 79% for US investment grade, 95% for European high yield, 99% for US high yield and a complete round trip in European investment grade.
Source: MarketAxess
EM median bid-ask stood at 0.1709 price % of par in the week ending 19 July, against a March peak of 0.2170 and the January low of 0.1448. Unlike the volume trend, this measure is unaffected by seasonal patterns in activity, since it compares each market’s own recovery from a common starting point.
Four of the five markets have effectively priced March out. Emerging markets have not.
What it means for trading desks
For buy-side desks, the practical consequence is that pre-trade data matters more in emerging markets than the headline spread suggests. Cost of execution has improved from March, but the pool of counterparties and transactions has continued to contract, and average ticket size means a single order can represent a material share of a week’s flow.
The DESK reported in May that dealers across credit markets appeared willing to show tight spreads in smaller sizes while remaining cautious about committing balance sheet in scale. The emerging market data is consistent with that pattern persisting into the third quarter in the market least able to absorb it.
Source: MarketAxess TraX (volumes and trade counts) and CP+ (bid-ask spreads). Average trade size is calculated as weekly notional divided by weekly trade count. Weeks are dated to the Sunday on which they end. Volumes for emerging markets and US markets are denominated in US dollars; European figures in euros.
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