Scoring Latin America: Deteriorating Markets And Dovish Banks

  • Thursday, September 24, 2015

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With turbulent markets and papal visits, the Americas have had quite a week. Given Latin America’s particular struggles, Prattle has decided to turn our algorithm on this region for our weekly report.

Stocks and currency values have tumbled across the region, and central bank sentiment has reflected the downturn. Both the Brazilian and Mexican central banks are decidedly dovish, scoring -.69 and -.63 respectively (which we typically round for our public analyses).

Central Banks of Mexico and Brazil

Dovishness is indicative of a poor economy, and, with two of the region’s major central banks trending in this direction, investors should take notice. With the U.S. as its largest trading partner, Mexico will likely rebound, but the future for the rest of the region doesn’t appear nearly as bright. Brazil, like Latin America as a whole, is fragile and may require monetary intervention to get back on its feet.

For Latin America there’s only one real question: can it encourage central banks to adopt the policies the region desperately needs?

Bottom line: Latin America needs help, and governments need to take notice.

The Prattle Team,
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Every week the Prattle team will be publishing its take on a global central bank region. There are 4 regions–European, North American, South American, and Asian–and the regions will be scored based on our analysis of all the central bank communications in that region over the past week. Indicating the “hawkishness” or “dovishness” of the region, the scores will be given in integers ranging from -2 to +2 where -2 is extremely dovish and +2 is extremely hawkish.

For more precise scoring on individual banks, speakers, and communications, you can reach out to Prattle on our contact page or through this link.