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Argentina’s government will today issue dollar-denominated bonds on the global capital market for the first time in over fifteen years. In this Update , we answer five key questions about the debt sale. … 5 questions on Argentina’s return to the bond …
19th April 2016
The decision by Peru’s central bank to hold interest rates at 4.25% for a second consecutive month suggests that policymakers believe inflationary risks are now waning. But we doubt inflation will fall back as quickly as the central bank expects and the …
15th April 2016
The decision just announced by a US appeals court effectively clears the way for the Argentine government to return to international capital markets imminently. This isn’t the end of the road for the debt saga just yet – it still seems likely that the …
13th April 2016
Concerns about the deepening political crisis understandably dominated our conversations during a trip to Brazil this week, with a growing number of local market participants now warning of complete dysfunction within government and a crisis of leadership …
The Central Bank of Chile’s decision to leave interest rates on hold at 3.50% reflects policymakers concerns about the weakness of the economy and reinforces our view that further rate hikes are unlikely to come until the second half of the year. … …
The stronger-than-expected rise in Mexican industrial production growth in February, to 2.6% y/y from 0.8% y/y in January, was encouraging, but it is too early to suggest that the sector has turned a corner. A looming fiscal squeeze, combined with …
11th April 2016
The early results of Peru’s presidential election suggest that the race will go to a run-off on 5th June. But given that both leading candidates are likely to continue with the current government’s market-friendly policies, the outcome should be welcomed …
The sharp fall in Brazilian inflation in March, to 9.4% y/y from 10.4% y/y in February, could prompt COPOM to take a less hawkish stance. But with inflation still likely to remain well above target this year, and the real vulnerable to renewed weakness, …
8th April 2016
Colombian inflation hit a 15-year high of 8.0% y/y in March – one of the highest rates among major EMs – and, while most of the rise has been due to temporary factors that should start to fade in the second half of the year, there are signs that …
7th April 2016
The fall in Mexican inflation last month, to 2.6% y/y from 2.9% y/y in February, confirms that overall price pressures in the economy remain in check. But the recent steady rise in core inflation suggests that underlying price pressures are building. We …
The rapid improvement in Brazil’s trade balance is due mainly to a collapse in imports caused by the extreme weakness of domestic demand. But there are also signs that a weaker real is starting to help exporters. We expect this to continue despite the …
6th April 2016
The run-up to Peru’s presidential election on Sunday 10th April has been overshadowed by concerns about the neutrality of the country’s electoral authorities. But, whatever the eventual outcome, the vote is unlikely to mark a major shift away from the …
5th April 2016
The Mexican government announced over the weekend preliminary plans to make additional cuts to government spending next year. This will keep the budget deficit in check against a backdrop of much lower oil receipts. But because the fiscal squeeze next …
4th April 2016
The sharp fall in Brazilian industrial production in February suggests that the economy was on course to contract in Q1 even before the more recent escalation in the country’s political crisis. The business surveys for March suggest that conditions …
1st April 2016
This report is only available as a PDF. Click to download. … New Argentine GDP data a step in the right direction …
31st March 2016
Financial markets across Latin America have fared well over the past month but the incoming economic data suggest that the region is still struggling. Most of the attention has, of course, focussed on Brazil, where the political crisis is spiralling. …
30th March 2016
The better-than-expected Chilean activity data for February suggest that, after weakening significantly in recent months, the economy has started to stabilise. Nonetheless, growth is unlikely to pick-up much over the course of this year. … Chile Retail …
According to widespread reports, Brazil’s largest political party, the PMDB, will later today announce that it plans to leave government – leaving President Rousseff closer to impeachment, and paving the way for VP Michel Temer to take over as soon as …
29th March 2016
We expect the Central Bank of Brazil to shift its bias towards looser policy over the coming months, but both the timing and the size of any cuts in interest rates will be determined by what happens to the real. If the currency maintains its recent …
A recovery in global commodity prices has helped to support a broad-based rally in Latin America’s financial markets so far this month. Brazilian assets are down a little today but they have outperformed the rest of the region over the past couple of …
24th March 2016
The larger-than-expected fall in Brazilian inflation in the first half of this month, to 10.0% y/y from 10.4% y/y over February as a whole, is encouraging. We expect inflation to continue to fall back over the course of this year, but it will be a slow …
23rd March 2016
The fall in Mexican headline inflation in the first half of March, to 2.7% y/y from 2.9% y/y over February as a whole, confirms that overall price pressures remain in check for now. However, the rise in core inflation suggests that underlying price …
22nd March 2016
Given that Brazil’s growing debt burden is denominated overwhelmingly in local currency there is little need for the foreign currency financing that an IMF bailout would provide. Instead, the main benefit of calling in the IMF would be to add much-needed …
President Mauricio Macri’s first 100 days in office have seen an impressive range of measures to put Argentina’s fragile balance of payments position on a more sustainable footing. By any reasonable yardstick the early days of his presidency must …
21st March 2016
The sharp slowdown in Chile’s GDP growth in the final quarter of last year means that the economy grew by a disappointing 2.0% over 2015 as a whole and we doubt the economy will pick-up soon. We expect growth to remain around 2.0% in 2016. … Chile GDP & …
18th March 2016
The Central Bank of Chile’s decision to keep interest rates on hold at 3.50% for the third consecutive month reinforces our view that the weakness of the economy will ensure the pace of further tightening remains gradual. We expect just one 25bp hike over …
It’s becoming increasingly difficult to keep tabs on the deepening crisis in Brazil. How much of it is due to political problems? How much is economic? And what should investors watch for as events unfold? In this Update we provide our take on the key …
16th March 2016
Peruvian economic growth slowed sharply in January, but the economy remains in a strong position and we expect GDP growth to accelerate this year. … Peru Economic Activity …
15th March 2016
2016 is shaping up to be a better year for investors in Latin America than 2015. With global commodity prices now at a bottom and set to edge up this year, we expect most equity markets in the region to perform well and most currencies to stabilise. …
The return to growth in Mexican industrial production at the start of this year is encouraging, but the underlying trend is still weak. What’s more, the pick-up was due to an improvement in mining and construction output, which may not be sustained in …
11th March 2016
The Central Reserve Bank of Peru’s decision to leave interest rates unchanged at 4.25% is unlikely to mark the end of the tightening cycle and we expect further rate hikes over the coming months. … Peru holds rates, but the tightening cycle has further …
Colombia’s economy grew by a respectable 3.3% y/y in the final quarter of 2015, but we expect the economy to slow this year as the impact of lower oil prices continues to bite and economic policy tightens further. … Colombia GDP …
10th March 2016
Brazil’s financial markets rallied after news broke last week that former President Lula had been detained (and later released) in relation to the ongoing corruption probe at Petrobras. But this reaction is difficult to square with the reality that the …
9th March 2016
The further rise in Mexican inflation in February to 2.9% y/y from 2.5% y/y in January, was due largely to a pick-up in food inflation, rather than an increase in general price pressures. Even so, with the headline rate likely to breach the central bank’s …
The fall in Brazilian inflation in February, to 10.4% y/y from 10.7% y/y in January, was driven entirely by the unwinding of the impact of regulated price hikes implemented in the same period last year. However, with inflation likely to be slow to fall …
The smaller-than-expected fall in Chilean inflation in February suggests that price pressures remain strong. This creates a dilemma for the central bank, which is likely to be reluctant to hike rates further at a time when the economy is weakening. … …
8th March 2016
The collapse in Brazil’s Composite Manufacturing and Services PMI in February has grabbed plenty of headlines but it’s notable that it has not been repeated in other (more reliable) business surveys. While these show that Brazil has remained mired in …
3rd March 2016
The sharp drop in Brazil’s manufacturing PMI for February is particularly disappointing given that it follows a general improvement in the survey data for January, and has dealt a blow to hopes that the economy might be nearing the bottom. In contrast, …
1st March 2016
Chile’s economy remained relatively weak in January as the industrial sector continued to struggle. While we expect conditions to improve over the course of this year, today’s data underscore the fragile nature of the economic recovery. … Chile Retail …
29th February 2016
Policymakers in Mexico and Colombia this month responded to the sharp falls in their currencies by hiking interest rates and stepping up intervention in foreign exchange markets. These moves appear to have succeeded in supporting their currencies over the …
25th February 2016
The past month has seen governments in several countries in Latin America announce measures to repair some of the fiscal damage caused by lower commodity prices. The most impressive package came from Mexico, where spending will be trimmed by almost 1.2% …
24th February 2016
The further jump in Mexican inflation in the first half of February, to 2.9% y/y, from 2.5% y/y over January as a whole, was due to a rise in food inflation, which is typically volatile and should prove temporary. Even so, with the central bank on …
The final estimate of Q4 Mexican GDP confirmed that the economy grew by 2.5% y/y, but revisions to the back series show that the slowdown at the end of last year was sharper than previously thought. Looking ahead, we expect a recently-announced fiscal …
23rd February 2016
The rise in Brazilian inflation in the first half of this month is concerning, given that January’s data had suggested the headline rate was close to peaking. We still expect inflation to drop back over the course of this year once one-off food price …
The surge in Peruvian GDP growth in the final quarter of 2015 was partly due to the temporary boost from the opening of a new copper mine. Nonetheless, the wider economic recovery appears to be going from strength to strength and the economy should remain …
22nd February 2016
We estimate that only one-sixth of the jump in Brazil’s budget deficit over the past two years has been due to a drop in tax receipts. Instead, the bulk (five-sixths) has been due to a rise in expenditure. Most of this rise in spending has been due to an …
19th February 2016
There are good reasons to think that the recession in Brazil – which is now the worst since at least the 1930s – should start to ease this year. But the good news ends here. While growth should return towards the end of 2016, the recovery will be …
18th February 2016
The move by Venezuelan policymakers to devalue the official exchange rates and raise fuel prices will help to ease the pressure on the public finances, but the measures fall chronically short of what is needed to close the country’s huge budget deficit. …
Expectations of lower inflation have probably played only a minor role in the fall in Treasury inflation compensation – the gap between the nominal yields of conventional Treasuries and the real yields of Treasury Inflation Protected Securities (TIPS) – …
17th February 2016
The Peruvian central bank’s decision to hike interest rates by 25bp for the third consecutive month, to 4.25%, as well as the more hawkish tone of the accompanying statement, point to concerns that price pressures are building. As a result, we have raised …
12th February 2016
