Emerging markets equity inflows accelerated to 19-month highs in mid-June, driven primarily by geopolitical de-escalation following the Trump-Iran memorandum of understanding signed on June 17th. This diplomatic breakthrough catalyzed a risk-on rotation into EEM, with Indian equities leading gains as Middle East tensions eased and oil price volatility compressed. However, concurrent headwinds emerged as the Federal Reserve signaled potential 2026 rate increases on June 18th, triggering selloffs across growth-sensitive markets including the ASX 200 and creating valuation pressures on emerging market assets. The dominant narrative reflects tension between geopolitical risk relief and monetary tightening concerns. EEM's 50-plus percent recent gains mask problematic concentration in East Asian semiconductors, limiting diversification benefits during sector rotations. Energy exposure through correlated holdings in XLE and USO amplified sensitivity to Iran developments. Forward implications suggest EEM faces headwinds if Fed hawkishness accelerates, potentially reversing the institutional capital reallocation that drove recent inflows despite underlying structural concentration risks.