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Latin America Bonds Trouncing Treasuries After Bold Rate Hikes

  • Ahead of the curve local rates seen diverging from Fed in 2023
  • Local currency bonds in region already returned 7% in 2022
Pedestrians pass the Brasil Bolsa Balcao (B3) stock exchange in Sao Paulo, Brazil.

Pedestrians pass the Brasil Bolsa Balcao (B3) stock exchange in Sao Paulo, Brazil.

Photographer: Patricia Monteiro/Bloomberg

Latin America’s beaten-down local bonds are getting another look from investors who see an opportunity to profit from monetary policies that are out of sync with the developed world.

Some of the region’s central banks moved so aggressively to raise interest rates over the past year that they could begin easing borrowing costs as soon as later this year after inflation peaks. That would happen as the Federal Reserve begins its own tightening cycle.