A shifting US dollar and China's deepening economic ties with developing countries are converging to make emerging market local currency bonds an increasingly attractive investment opportunity. Key takeaways: New safe haven: with many EM countries demonstrating strong institutional and market discipline that contrasts sharply with deteriorating DM debt sustainability and fiscal discipline, EM local currency fixed income is becoming a compelling investment story. Weaker dollar: the overvalued US dollar, combined with shifting policy priorities in Washington, has encouraged global investors to diversify away from it. As the dollar declines over the medium term, EM local currency fixed income stands to benefit from carry-friendly conditions. China's expanding role: China's expanding trade ties and new infrastructure links with EM are creating new economic opportunities, helping to anchor EM inflation and support local growth as it diverts high value-add exports away from developed markets toward EM and recycles its record current account surplus into EM local currency fixed income. Favourable trends aligning: high real rates, fiscal and monetary discipline, a benign dollar backdrop, and subdued inflation are all working together to strengthen the case for EM local currency fixed income. A compelling opportunity: with volatility of EM local sovereign assets declining since Covid and Sharpe ratios improving significantly, we believer that EM local currency fixed income is becoming more attractive, especially versus EM equities.