The EM Trader CEE ing through the Vol

Economics Research 17 September 2026 | 4:35PM BST

n Between a Hawkish Fed and Energy Vol. In the last couple of weeks EM Kamakshya Trivedi | currencies, equities and spreads have moved largely sideways, displaying Goldman Sachs International impressive resilience in the face of energy price volatility and building Fed hike Sunil Koul probabilities, even as local rates have tracked core rate pressures. The hawkish | Goldman Sachs International Fed meeting yesterday (16 September) added to this, although if the hiking cycle Danny Suwanapruti is limited (as our economists expect) and it helps to anchor rate volatility in this | sturdy growth and positive risk environment, the macro backdrop for EM should Goldman Sachs (Singapore) Pte

continue to be supportive. With little predictability in the day-to-day energy Teresa Alves | volatility driving markets, idiosyncratic EM themes are becoming more pertinent, Goldman Sachs International and in this EM Trader, we zoom in on CEE asset markets where local catalysts are Tarun Lalwani, CFA | likely to take centre-stage again. Goldman Sachs India SPL n EM Local Rates: Energy Still Rules… EM local rates continue to be at the mercy Victor Engel of energy price volatility alongside core rate pressures, as supply side concerns | now extend beyond crude oil to European natural gas, which continues to trend Goldman Sachs International

higher and add to hawkish impulses on CEE rates. We still think that broad-based Lexi Kanter | relief in EM rates is contingent on lower energy prices and, without this, hike Goldman Sachs & Co. LLC premium is likely to remain in curves even as EM inflation and central banks have Mambuna Njie been more dovish than expected. We therefore remain cautious on outright | Goldman Sachs International longs outside of select high-yielders such as HUF and BRL, where policy actions amid Euro area convergence in the former and elections in the latter could Shuyi Fang | Goldman Sachs International provide catalysts for rallies into year-end. n … But More So in CEE Rates. European natural gas adds another dimension to supply side risks in the CEE, and we think this could be headwind to front-end and belly rates there going into the winter. But given that markets already appear to be pricing these curve points too high relative to our current fair value estimates, we think that European gas prices will need to move towards our commodities strategists’ peak winter upside price scenario of 105 EUR/MWh for CEE curves to materially flatten from here. In our baseline, however, we think that belly rates in HUF should remain well-supported by near-term policy catalysts on Euro area prospects, and we initiate a trade recommendation to receive 5Y HUF IRS. In the PLN curve, while flattening pressure owing to natural gas prices is a risk, the fiscal situation there is a clear risk and we think the curve should steepen on the back of this, and we initiate a trade recommendation for 2s10s PLN IRS steepeners. In CZK, we think the long-end provides enough valuation cushion to

Investors should consider this report as only a single factor in making their investment decision. For Reg AC certification and other important disclosures, see the Disclosure Appendix, or go to

absorb both natural gas and fiscal risks. n CEE FX: Relative Value to Mitigate the Energy Vulnerability. Apart from the large election-driven HUF appreciation, CEE FX performance this year can mostly be explained by the impact of the Iran war on energy prices and European growth expectations. High energy prices have led to a deterioration in external balances across the three economies and, on our model, higher oil and natural gas prices imply CEE FX depreciation vs the Euro since late February. While HUF performance decoupled from global factors around the election, it has since returned to trading more closely in line with the predicted series of our model. Looking at high-frequency betas to oil and natural gas prices, we find that HUF is the most sensitive to energy price shifts — and this beta is currently near their historical highs — followed by PLN and CZK. As we head into Q4, various Hungary-specific developments could…