BNY Mellon observes capital rotating out of Latin American bonds into regional equities as US rate hikes reshape risk assessments.
Investors are reducing exposure to Latin American bonds as rising US yields prompt a repricing of real-rate risks in the region. The shift reflects growing caution over fixed-income assets amid tighter global financial conditions.
Flows are rotating toward Latin American equities, where valuations and growth prospects appear more attractive. The trend follows a period of crowded positioning in regional bonds, which had previously benefited from low US rates.
BNY Mellon maintains a constructive tactical outlook on Latin America, citing improved fundamentals and carry opportunities in select markets.