Next Big Bet in Emerging Markets Hangs on When Rate Cycles Peak
- Market underpricing likely curve steepening in Latam: Goldman
- PineBridge says strong Latam currencies ease pressure to hike
Vendors walk through the CEAGESP produce wholesale warehouse in Sao Paulo, Brazil.
Photographer: Tuane Fernandes/BloombergTraders of emerging-market debt have a new challenge: Predicting which central banks will be first to halt rate hikes, and then buying bonds from those countries.
While that might sound premature to investors digesting the Federal Reserve’s first interest-rate increase since 2018, Latin America has emerged as the front-runner in this high-stakes guessing game after nations in the region began aggressive tightening about a year ago. Brazil signaled a hike slated for May will likely be its last after boosting rates almost 10 percentage points in just 13 months, and central banks in Chile and Colombia raised borrowing costs last month by less than economists forecast.