LatAm currencies slip as US long-term yields climb; stocks mixed

Elsewhere, in Mexico, the central bank struck a cautious tone in this month's policy meeting, signaling it is likely to keep rates unchanged for some time. The Mexican peso MXN= slipped 0.1%, while the country's main stock index .MXX rose 0.6%. Mexico's economy likely grew 2.7% in July from a year earlier, according to a preliminary estimate released by national statistics agency INEGI. Most Latin American currencies weakened on Thursday, while stocks were mixed, as U.S. long-term bonds resumed their climb despite the Treasury's liquidity support measures, while inflation concerns clouded the region's economic outlook. The MSCI Latin America equities index .MILA00000PUS fell 0.2% and the regional currency gauge .MILA00000CUS was also off by 0.3%. The yield on the 30-year U.S. benchmark US30YT=RR rose to 5.2308%, even as Treasury Secretary Scott Bessent signaled more buybacks for long-term debts, a day after surprising the market with plans to double them. Higher U.S. yields tend to tighten financial conditions in emerging markets by raising borrowing costs and boosting demand for dollar-denominated assets. Investors believe that several factors would need to align for a reversal in the long-term Treasury bond selloff. "A constructive view would require some combination of a downside fiscal surprise, slower AI-related issuance, a shift in Treasury's issuance strategy, and a sustained run of soft activity data. Otherwise, the path of least resistance is for higher yields," said Lawrence Gillum, chief fixed income strategist for LPL Financial. Latin American economic growth is set to remain sluggish through 2027 despite stable inflation, the U.N. Economic Commission for Latin America and the Caribbean (ECLAC) said on Thursday. In Brazil, the real BRL= weakened 0.4%, while the benchmark Bovespa stock index .BVSP fell 0.1%. Brazil's Finance Minister Dario Durigan said that if Luiz Inacio Lula da Silva was re-elected, the government would maintain its fiscal framework through spending controls and efforts to boost revenue. Brazil's assets remain under pressure following hawkish signals from the central bank's meeting earlier this month, ahead of the presidential election in October. Recent polls show Lula leading his right-wing opponent, Flávio Bolsonaro. Lula's victory could keep Brazil on a different political path from several of its regional peers. "If there is a Lula continuation, then you're no longer counting on the entire hemisphere, or almost all of South America, aligning with the U.S.," said Juan Perez, director of trading at Monex. Some analysts also believe Lula's victory could pave the way for more expansionary fiscal policy, potentially adding to inflationary pressures.

LatAm currencies slip as US long-term yields climb; stocks mixed

Mexico central bank signals prolonged pause

Latin American markets weaken as U.S. yields rise

Brazil assets pressured by fiscal and election backdrop

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