Felipe Pacheco writes for Bloomberg on pressure points mounting in Latin American markets in recent days.
- Venezuelan 10-year sovereign bonds dropped to the lowest level in more than six months following the decision of the Constitutional Court to take over duties of the opposition-controlled National Assembly. However, this was followed by a positive sign when the decision was reversed over the weekend.
- The oil price trajectory will ultimately decide the fate of Venezuelan bonds.
- A rebound in Paraguay’s US dollar-denominated bonds is under threat following violent protests in response to a proposal that would allow President Horacio Cartes to run for reelection.
- The results of the Ecuadorian election have been called into question following the election of leftist Lenin Moreno. The conservative opposition candidate has demanded a recount amid accusations of election fraud.
- Ecuador’s dollar-denominated bonds still offer a higher yield than the similarly rated Nigerian notes.
- Brazilian president Michel Temer continues to push forward with controversial austerity measures, despite a 73% disapproval rating. The real is now one of the five most volatile currencies, along with the Mexican and Colombian pesos, among the 31 major currencies tracked by Blooomberg.
- For the first time in almost a year, leveraged funds are shorting the US dollar versus the Mexican peso. Investors have noted a shift in President Trump’s tone from the harsh rhetoric of the campaign trail.