Fidelity New Markets Income Fund: Navigating the Nuances of Q3 2025

Well, another quarter has certainly flown by, hasn't it? As we wrap up our reflections on Q3 2025 for the Fidelity New Markets Income Fund, it's clear we navigated a global economic landscape that remained, shall we say, stubbornly complex. It wasn't a quarter without its share of twists and turns, but frankly, our focus stayed sharp on finding those resilient income opportunities across emerging markets.

Looking back at the three months ending September 30th, 2025, the fund generally held its own, delivering what we consider to be a respectable performance in a period marked by ongoing inflation anxieties and varying central bank narratives worldwide. You know, it really underscores the importance of a truly diversified approach when dealing with the inherent volatility of emerging economies. We saw some segments of the market truly shine, while others, perhaps less surprisingly, felt the pinch of tighter global financial conditions. The appreciation in certain local currency debt, particularly in nations demonstrating fiscal prudence, offered a welcome boost, though this was somewhat counterbalanced by a broader risk-off sentiment in some hard currency sovereign bonds.

Our strategy, you see, really boils down to meticulous, bottom-up credit selection. We’re not just throwing darts at a map; we’re deeply analyzing individual issuers – whether they’re governments or corporations – to understand their ability to meet obligations. In Q3, this meant selectively increasing our exposure to corporate bonds in specific Asian and Latin American markets where we identified strong balance sheets and compelling growth trajectories. We also maintained a keen eye on countries that had made genuine progress in combating inflation and stabilizing their fiscal positions. Frankly, that discipline paid dividends. It's not about chasing the highest yield at any cost; it's about discerning value where others might just see risk.

The macroeconomic picture for emerging markets continues to be a mixed bag, and that's precisely why active management is so crucial. We're observing a fascinating divergence: while global inflation pressures seem to be easing ever so slightly, some emerging nations are still grappling with domestic price increases. Interest rate policies, too, are charting their own courses, creating both headwinds and tailwinds depending on the specific region. Commodity prices, as always, played a significant role, benefiting some commodity exporters while adding pressure to importers. Our team spent considerable time dissecting these localized dynamics, ensuring our portfolio reflected a balanced view of both opportunity and potential vulnerability.

Now, peering into the horizon, it’s never a crystal-ball situation, is it? However, our outlook for the coming quarters remains one of cautious optimism. We anticipate that global economic growth will likely moderate, but this doesn’t necessarily spell doom for emerging markets. In fact, many of these economies are proving increasingly resilient, driven by strong domestic demand and, in some cases, improving structural reforms. We’re particularly keen on identifying opportunities in nations that are committed to fiscal sustainability and have robust foreign exchange reserves. We also see continued potential in local currency markets where central banks have demonstrated credibility in managing inflation.

We remain steadfast in our commitment to identifying high-quality income streams, managing risk diligently, and adapting the portfolio as market conditions evolve. It's about being nimble, yet grounded in fundamental analysis. We believe the Fidelity New Markets Income Fund is well-positioned to continue delivering attractive income and long-term capital appreciation for our investors, even amidst the ever-shifting sands of the global economy. Thank you for your continued trust and partnership.