Brazil’s riots, Peru turmoil, Mexico’s USMCA win

Brazil’s financial markets have recovered after an initial drop following the riots in Brasília last Sunday, but we think there are reasons for caution. This is all coming at a time when the economy is showing more pronounced signs of weakness. Political turmoil has also (again) engulfed Peru this week, reinforcing the impression that the country is increasingly ungovernable, which will weigh on investment and growth. Finally, this week’s ruling in favour of Mexico and Canada in a dispute with the US over rules of origin boosts Mexico’s hopes of benefitting from nearshoring.