Latin America Economics & Strategy Daily: Brazil’s Labor & Credit, Mexico GDP & Fiscal, Argentina Reforms, Uruguay BoP.

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31 Jul 2026 09:29:45 ET │ 18 pages

Latin America Economics & Strategy

Daily

Brazil’s Labor & Credit, Mexico GDP & Fiscal, Argentina Reforms,

Uruguay BoP.

CITI'S TAKE

Today we discuss developments in Brazil, Mexico, Argentina and Uruguay

Regional Macro — We saw a bounce in risk since Thursday, despite steeper UST

curves post-FOMC, as the Fed Chair Warsh maintained in his rhetoric their

commitment to bringing inflation back toward target, while remaining absent of any

clear measures to do so, keeping monetary policy on hold (with three dissenting

votes that opted for a hike). Supporting though the more cautious FOMC was the

softer US GDP print of 1.5% QoQ, while monthly core PCE came in marginally below

consensus. Overall, yesterday’s rally seems more a reflection of markets dialing

down the chances of a more aggressive Fed, as expectations of a more disruptive

tightening in monetary policy were priced out. Strong performances across LatAm

FX during Thursday’s session highlighted the natural reaction to a weaker USD. On

the region, we have BanRep policy decision today, where markets expect the central

bank to tighten policy by a further 50 bps.

LatAm Strategy Trades — We remain long BRL against EUR and AUD as the current

macroeconomic backdrop still suggests resilience for high real-yielding EM (link).

We are holding on to our vol adjusted (structurally long USD) long MXN, BRL and

TRY vs CAD, CHF and THB, to capture high yielders carry (link).

Brazil — Labor market heated dynamics seem to be cooling down in Jun-26. MoF

Durigan starts talking about possible fiscal consolidation measures. Credit

accelerates sharply in Jun-26 regardless of the tight monetary policy. IGP-M came

in at -1.16% MoM in Jul-26, slightly below expectations.

Mexico — 2Q26 GDP growth likely accelerated sharply, though the underlying trend

appears less robust. Fiscal outperformance in January-June was driven primarily by

expenditure underexecution rather than stronger revenues.

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Ernesto Revilla AC

Luis E Costa, CFA AC

Esteban Tamayo AC

Leonardo Porto AC

Paulo Lopes AC

Thais Ortega AC

Felipe Juncal AC

Donato Guarino AC

Ricardo Raul Dessy AC

Julio Cesar Ruiz AC

Ivan Riveros,CFA AC

…