(Harvest) The policy outlook in certain emerging markets remains precarious: the latest government appointments in Mexico do not bode well for energy reform. We saw a small positive fiscal surprise in Brazil this morning. Primary deficit was smaller than expected in June and the 12-month running deficit narrowed to 1.34% of gross domestic product (GDP) (see chart below). The headline gap widened only marginally to 7.28% of GDP (on a 12-month running basis). The latest developments on the political front (presidential candidate Geraldo Alckmin, who favors fiscal adjustment, getting support from the big center parties) look encouraging.