The sharp rally in Brazilian asset prices this week appears to reflect growing expectations that right-wing candidate Jair Bolsonaro will win the presidential election, the first round of which is on Sunday, but we think the markets are getting ahead of themselves. Meanwhile, although one dissenter voted for a rate hike at Mexico’s interest rate decision last night, we don’t think that policy tightening is imminent. In fact, we still think the next move in rates will be down.
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