It is going to be a Fed week. The market is 100 percent in sync with a quarter of a percentage point rise for Fed fund rates at 4.75 percent.
It is pretty evident that every time you get above (the 10-year Treasury yield of) 4.72 to 4.73 percent area the market becomes uneasy. That is the inflection point where you see negative returns and some spread widening (in emerging market debt).
Treasuries seem to be overly happy and emerging markets seem to be quite content also.
In general it's a healthy profit taking move for the EM market, and for the domestic markets in Latin America as the stock and currency markets are coming off.
Emerging markets are very dependent on the direction of the Treasury. The market has had very good success in not invading above the (10-year Treasury) 4.80 percent yield level which is a very difficult area for the U.S. Treasury market.
Overall, you have a very technical market pushing us to historical highs because once people got a feel for these higher levels, it has been an easy push to the upside and has been helped by lack of liquidity.
The Latin American market is going to pay a lot of attention to moves in U.S. Treasury rates, while the US equity market remains a major momentum generator.
The market place is at the mercy of the Fed, its rhetoric and of U.S. Treasuries, which are highly data dependent. Anything that signals weakness either in inflation or in housing will be positive for Latin America because it is going to weaken Treasury yields.