Developing country assets posted mixed performance on Monday ahead of talks between U.S. President Donald Trump and Ukrainian President Volodymyr Zelensky, as investors closely monitored for signs of progress on a Russia-Ukraine peace agreement.

The South African rand led declines in the emerging market currency index, serving as a barometer of risk appetite, as the dollar strengthened. Meanwhile, the emerging market equity benchmark posted modest gains but surrendered most of its advances from the Asian trading session.

Trump's Monday meeting with Zelensky and other European leaders coincides with the Federal Reserve's annual Jackson Hole symposium this week, where Fed Chair Jerome Powell's remarks could provide clues about potential interest rate cuts in September.

"Markets are a bit in wait-and-see mode ahead of the Jackson Hole meeting on Friday," said Brendan McKenna, an economist at Wells Fargo in New York. "The Consumer Price Index (CPI) and Producer Price Index (PPI) data have markets somewhat concerned that Powell may not clearly signal support for a rate cut next month. The market doesn't want to be caught on the wrong side ahead of the symposium."

Deutsche Bank analysts led by Jim Reid noted in a report that despite market expectations of rising inflation, U.S. rate swap traders still anticipate the Fed will cut rates by more than 100 basis points over the next 12 months.

"Risk assets overall have shown remarkable upward momentum, leading to increasingly stretched valuations," the analysts wrote.

Additionally, Bolivian dollar bonds emerged as the best-performing assets in emerging markets after the country's voters selected two pro-business candidates for the October presidential runoff election. According to compiled data, bonds maturing in 2028 and 2030 gained at least 3 cents per dollar, breaking above 80 cents to reach their highest levels in two years.

Ukrainian dollar bonds were also among the day's top performers ahead of the meetings. However, a team led by Mark Haefele, Chief Investment Officer at UBS Global Wealth Management, wrote in a report that the war could extend into next year due to significant differences in negotiating positions and the absence of decisive progress on the battlefield.

"Given the lack of trust between the parties and the wide gap in expected outcomes, any negotiation process will be protracted, and any agreement may be subject to challenge," the UBS team stated.