The LatAm Feedbeker: Less appetite around

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The LatAm Feedbeker: Less appetite around

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The LatAm Feedbeker

Less appetite around

Investment Strategy

Mood turned more negative 21 May 2026

We spent the past four days meeting primarily with equity clients in London and Paris. Investment Strategy

Concerns around the external backdrop, combined with recent political developments in Latin America

the region, are pushing investors toward a more cautious stance. A few weeks ago, David Beker >>

clients were waiting for the war to end before deploying additional risk in LatAm. Now, Bz Econ/FI & LatAm EQ Strategy

the key question is whether they need to further reduce exposure to the region. Merrill+55 11Lynch2188 (Brazil)4371

david.beker@bofa.com

Investors concerned about risks for higher global yields Paula Andrea Soto, CFA >>

While there is still no clarity on the duration of the war, clients believe the damage has LatAmMerrill LynchEquity (Brazil)Strategist

been done. Oil prices are expected to remain elevated, adding risks of higher inflation +55 11 2188 4226

paula.soto@bofa.com

and weaker global growth. Investors we met highlighted concerns about rising global

yields and their potential impact on LatAm currencies and flows. Recall that a weak

dollar has been a key driver of allocations to the region.

More pressure for LatAm Central Banks

Higher inflation is increasing the risk that rates will remain higher than previously

expected at the start of the year. The Brazilian Central Bank has recently delivered 25bp

cuts per meeting, but some investors believe it may be forced to pause soon. Even if

easing continues, the magnitude of cuts is unlikely to provide meaningful relief for the

corporate sector. In Mexico, the central bank has paused rate cuts, while corporate