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More fiscal worries in Brazil, the regional re-opening

Worries about a worsening of Brazil’s fiscal position in the run-up to next year’s general elections have continued to build, and we think there may now be a fiscal risk premium of about 50bp embedded in sovereign dollar bond yields. Meanwhile, governments in the region took several important steps towards re-opening this week, and near-term economic prospects continue to brighten. But the growing prevalence of the Delta variant poses a worrying threat.

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