Financing conditions have tightened for emerging markets (EMs), both domestically and externally. Rising inflation, as well as tightening of financing conditions globally, are exerting pressure on EMs’ assets. Following publication of recent U.S. job report, we now expect six hikes by the Federal Reserve in 2022 (up from expectations of three or more a month ago). However, even though tighter external conditions are going to pressure EM exchange rates and bond yields, our view is that EM economies are overall better prepared for the Federal Reserve’s upcoming tightening cycle than in 2015. At the same time, worsening financing conditions could pressure low rated corporations amid restricted market access and rising debt costs, which could increase defaults.