Latin America Local Markets Compass: Steady as she goes

Research evidence excerpt

Latin America Local Markets Compass: Steady as she goes

Tania Escobedo Jacob AC Global Markets Strategy

(1-212) 622-4128 14 July 2026 J P M O R G A N

tania.escobedojacob@jpmorgan.com

Latam Local Markets Strategy Views: Summary

Table 1: Latam Local Markets summary views

Local currency rates FX

No outright trades. We still think tactical conditions do not yet justify re-

No outright trades. The government has presented its full-year 2026–

entering carry trades, despite a structurally supportive medium-term

2027 USD financing program: while access to international markets

Argentina backdrop. On seasonality, the third quarter has historically been less

remains an option, it is not the base case so long as cheaper alternatives

favorable: gas imports tend to rise and winter vacations typically pressure the

are available that require less incremental fiscal effort.

tourism balance.

MW. While the incoming data have begun to improve, election proximity

should keep volatility elevated. June inflation surprised to the downside

MW. Political noise is expected to remain high as we move closer to the

while credit and labor indicators also point to soft activity in May, but the

election, and with polls sending mixed signals, underperformance is likely if

lagged effects of Lula's credit measures and improved sentiment suggest

Brazil Lula remains ahead into the August 15 deadline to change candidates.

potentially firmer readings in Q3. The BCB hasn't ruled out additional 25 bp

Positioning remains near historical highs, shielded by hefty carry. We would

cuts, but the scope for further easing has diminished. We expect rates to

not rule out additional losses should polls fail to reflect a recovery to the right.

trade similarly to Colombia's pre-election pattern, lacking a clear anchor if