EM by EM #6 – is Brazil still attractive?
In my very first EM by EM piece from the start of April, I presented Brazilian sovereigns as an overlooked asset class that would likely gain favorable tailwinds due to the nature of the current business cycle and the underlying macro fundamentals. In short, it has been spot on so far:
Chart 1: Brazil 10 year bond yield
In addition to being bullish on Brazilian bonds, I also stated that I preferred the position naked without a USD hedge – another hit to the list thus far- despite DXY having rallied simultaneously:
Chart 2: DXY USD index vs BRL/USD