LatAm assets rise as soft US inflation data dims October Fed hike odds
SPY•Latin American stocks and currencies advanced after US August PCE inflation came in at 3.4% annually, below the 3.7% estimate. Traders priced in a roughly 35% chance of an October Fed rate hike, down from about 45%.
1. Inflation data lifts assets
Most Latin American currencies strengthened against a weaker dollar on Wednesday, while stocks advanced after lower-than-expected US inflation eased concerns about a rate hike next month. The MSCI Latin American equity index rose about 1%, and its currency index gained 0.6%, snapping a six-day losing streak.
2. Regional developments
Brazil’s real rose 0.34% and its equities gained 1.1% ahead of the October 4 first round of the presidential election. Brazil’s gross debt increased to 82.9% of GDP in August, and China said it would impose an additional 55% tariff on Brazilian beef shipments from October 1 after the country reached its annual quota of 1.1 million metric tons.
3. Other market moves
The Mexican peso rose 0.32%, though it remained on track for a 5.9% monthly decline. Colombia’s peso gained 0.5%, while Chile’s unemployment rate reached its highest level in more than five years in the quarter through August; the Chilean peso slipped 0.12%.
