Latam assets head for weekly losses as Treasury yields rise; Brazil inflation tops forecasts
EWZ•Most Latin American assets were on track for weekly losses as rising Treasury yields, expectations for further Fed rate hikes and weaker commodity prices weighed on sentiment. Brazil’s annual inflation reached 4.47%, above the 4.3% forecast.
1. Regional markets weaken
MSCI Latin American stocks fell 0.9% and the region’s currency index slipped 0.5%. The Mexican peso was heading for its biggest weekly drop since March, while Colombia’s peso rose 0.9% and was on course for its first weekly gain in two weeks.
2. Brazil inflation above forecasts
Brazilian consumer prices rose 4.47% year over year in the period through mid-September, exceeding economists’ 4.3% forecast. The real fell 0.2% and the Ibovespa declined 0.8%. The data came after the central bank’s fifth consecutive rate cut last week; the bank projected inflation close to its 3% target at the policy horizon for its next rate decision.
3. Yields weigh on sentiment
Elevated Treasury yields, expectations for further Federal Reserve rate hikes and weaker commodity prices pressured regional assets. Thirty-year Treasury yields returned to multi-decade highs as crude traded near $105 per barrel, while oil prices eased 1.2%.
