Citi Research highlights the growing risk of fiscal intolerance in emerging markets (EM) due to a rising US term premium, which has increased by over 100 basis points since mid-September 2024. This shift poses challenges for EM economies with fiscal vulnerabilities, such as Brazil, Colombia, and Mexico. "The rise in US term premium raises the risk of less tolerance for EM fiscal slippages," Citi analysts note. Despite a strong US dollar and high US rates, Citi has leaned towards a more dovish stance for several EM central banks, including Singapore, Mexico, and Turkey. However, Brazil's fiscal fragility, marked by high debt and deficits, remains a concern, with its primary balance far from stabilizing debt levels. The report warns that market tolerance for fiscal slippages could deteriorate if the US term premium continues to rise, potentially crowding out appetite for EM debt.