Latin America‘s Unfinished Business: Sunday Start | What‘s Next in Global Macro | Latin America

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Latin America‘s Unfinished Business: Sunday Start | What‘s Next in Global Macro | Latin America

Idea

August 2, 2026 06:00 AM GMT

Morgan Stanley & Co. LLCMSunday Start | What's Next in Global Macro | Latin Simon Waever

America Strategist

Simon.Waever@morganstanley.com +1 212 296-8101

Morgan Stanley C.T.V.M. S.A.+

Latin America's Unfinished Fernando D Sedano

Chief LatAm Ex-Brazil Economist

Fernando.Sedano@morganstanley.com +55 11 3048-6605Business

Morgan Stanley México, Casa de Bolsa, S.A. de C.V.+

Nikolaj Lippmann

Equity Strategist

Nikolaj.Lippmann@morganstanley.com +1 212 761-2463

Halfway through the year, Latin America has delivered enough to keep the bull case

we outlined in January alive, but not enough to ensure it. The region has

outperformed most other emerging markets, and several encouraging policy shifts

have materialized over the past year. External conditions and second quarter

earnings will influence how far and how quickly markets can move in the near term,

but in our view the next leg of upside will depend mainly on whether governments

can deliver credible fiscal and structural reform. Across the region’s asset classes,

we still think investors are being paid to position for a favorable outcome, but

country and instrument selection matter.

The main near-term headwind is external rather than domestic. Competition for

capital remains intense, and with the Fed on hold and the dollar still firm, investors

have been reluctant to chase EM carry and value, however attractive Latin America

may look. We would offer two counterweights. First, we do not think this backdrop

will last indefinitely. Our US economists expect the Fed backdrop to become more

supportive over time, removing one of the main obstacles to a broader rotation of