Brazil
Our EM strategists are downgrading Brazilian equities from neutral to underweight and advise absolute-return investors to stay clear of Brazilian markets. They maintain underweights in domestic bonds and sovereign credit within their respective EM portfolios.…
We are downgrading Brazilian equities from neutral to underweight and maintaining our underweights in Brazil's domestic bonds and sovereign credit within their respective EM portfolios. Go long Brazilian 5-year CDS as a short-term trade.
Brazil’s central bank cut rates for a fourth consecutive meeting, but inflation risks persist. The move followed a softer-than-expected inflation print, and policymakers signaled that more cuts are likely. Our EM strategists have argued that both policymakers…
Overstretched foreign inflows into Brazilian markets will reverse, while soaring oil prices will not benefit Brazil in the near term. Avoid the country’s risk assets and the BRL, and stay underweight Brazilian equities and fixed income relative to EM. We also recommend paying 10-year Brazilian swap rates.
Go long LATAM ex. Brazil banks / short global bank stocks. Brazilian bank equities will underperform due to poor and worsening macro fundamentals.
Despite similar headline inflation, underlying dynamics favor Mexico over Brazil across EM assets. Brazil’s latest CPI print was in line with consensus at 4.44%, near the upper end of the target range. In Mexico, inflation surprised modestly to the downside…
Brazilian risk assets will underperform global peers on the back of ultra hawkish monetary policy. The Brazilian Central Bank (BCB) opted to hold interest rates at 15% due to still elevated inflationary pressures. The decision will reinforce a…
Although inflation has fallen within the upper end of the target range in both of LatAm’s largest economies, our EM strategists are more constructive on monetary easing and financial markets in Mexico than in Brazil. Mexico’s latest CPI prints surprised to…
Brazil’s financial markets are on shaky ground following the central bank’s hawkish meeting and disappointing political developments, reinforcing our negative view on the country’s risk assets. The three pillars of this year’s rally in Brazilian risk assets…
Despite a shift toward an easing bias, a December cut remains unlikely in Brazil. A BCB committee member stated the tightening cycle has ended and the next move could be a cut, shifting the bias from tightening to easing. But a single voice does not influence…