Across the Americas Market Update

The report highlights a cautious outlook for the US, recommending entry into front-end UST longs as yields peak, while warning of sovereign credit risks in Mexico and political volatility in Brazil.

Key Takeaways

• 1.The Fed is expected to maintain rates in the near term as they await evidence of inflation returning to the 2% target, despite rising concerns about inflation persistence.
• 2.Brazil's long-BRL trade is under pressure due to a corruption scandal involving Banco Master and leaked audio connecting Flávio Bolsonaro to Daniel Vorcaro.
• 3.Mexico's sovereign credit rating was downgraded by Moody's to Baa3, leaving it just one notch above speculative (junk) grade due to fiscal deterioration and weak growth.

Table of Contents

• US Week in Review
• What to Watch for Next Week
• US Rates Strategy
• LatAm Highlights
• Brazil – Can the Flávio-Vorcaro connection kill the long BRL trade?
• Mexico – On Path to Losing Investment Grade
• Peru – Resilient growth and supply-side driven inflation

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