What happened
Expectations continue for more economic data from the US. The market is waiting for the American GDP (Gross Domestic Product) numbers for the 1st quarter, which will be released on Thursday (25), and inflation measured by the PCE, which will be released on Friday (26). Data published in recent weeks made investors postpone bets on an interest rate cut by the Fed (Federal Reserve, the US Central Bank) until September.
The market is reviewing projections for American interest rates. At the beginning of the year, operators were even betting on a drop of up to 1.5 percentage points throughout 2024. Today, most are pricing in just two cuts of 0.25 points. “Now we really have to wait for the next data and see what they signal about this issue,” Thiago Avallone, foreign exchange specialist at Manchester Investimentos, told Reuters.
Perspectives for interest rates in Brazil remain on the radar. The president of the BC, Roberto Campos Neto, warned that increased uncertainty could lead to a slowdown in the pace of monetary easing. This caused analysts to revise their projections, now forecasting Selic at 9.5% per year at the end of 2024 and at 9% in 2025, according to the latest Focus Bulletin.
The dollar rose today (…) amid expectations of high interest rates for longer in the USA, which increases the attractiveness of American fixed income and the risk premium, especially on the stock markets of emerging countries. In my view, an expectation of deterioration in the Brazilian fiscal scenario, with the change in the fiscal target announced last week, has also influenced this flow.
Jaqueline Kist, partner at Matriz Capital, told UOL
(With Reuters)
