A victory for left-wing populist Andres Manuel Lopez Obrador (Amlo) in Mexico’s presidential vote this weekend looks priced in. The market reaction is likely to take its cue from the performance of his Morena coalition in the legislative elections taking place on the same day – a strong showing could hit the peso and push up yields. Elsewhere, next week’s data releases are likely to confirm that the truck drivers’ strike in Brazil last month caused growth in the industrial sector to slow sharply and pushed up inflation. That said, the central bank’s latest minutes stressed that policymakers will look through any resulting rise in inflation (and won’t react mechanically to the fall in the real either). The market appears have got a little ahead of itself by pricing in aggressive hikes in the Selic over the coming months.
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