Brazil Macro Daily(Beta Mode)
Copom Poised to Cut Selic on Cooling CPI
Market Snapshot
| Asset | Level | Change |
|---|---|---|
| Bovespa | 177,895.00 | -0.06% |
| USD/BRL | 5.14 | +0.70% |
| EUR/BRL | 5.93 | +1.06% |
| Vale | 14.83 | +1.71% |
| Petrobras | 18.72 | -1.78% |
| WTI Crude | 76.41 | +0.84% |
| Gold | 4,216.40 | +2.95% |
| Bitcoin | 64,097.26 | +0.06% |
| Brazil Short-term Rate | 14.39% | -0.76% |
| Brazil Long-term Rate | - | - |
Prior Economic Events
| Data | Prior | Cons | Actual |
|---|---|---|---|
| Industrial Production Month-over-Month | -0.90 | -0.80 | 1.80 |
Brazil Short-term Policy Rate | Type: macro_line | Rate %: 14.39 (2026-06-01) | Range: 5.52–15 | Trend(6pt): 5.52,13.75,11.75,13.64,14.5,14.39
Today's Economic Events
| Data | Prior | Cons | Time |
|---|---|---|---|
| S&P Global Services PMI Index | 51.30 | - | 05:00 |
| Central Bank Interest Rate Decision | 14.25 | 14 | 13:30 |
| Thursday (2026-08-06) | |||
| Trade Balance | 9,760m | 8,400m | 10:00 |
- Industrial production surged 1.8% MoM, beating forecasts and signaling manufacturing resilience.
- Markets expect Copom to lower Selic to 14.00% from 14.25% amid 4.64% CPI.
- US revocation of Brazil’s ambassador visa escalates diplomatic tensions ahead of October polls.
Yesterday's Recap
Brazilian industrial output rose 1.8% month-over-month in June, sharply above the -0.8% consensus and reversing May’s -0.9% contraction. The beat reflected stronger auto and machinery production, supporting export-oriented sectors tied to iron ore and soybeans. Bovespa closed 0.06% lower at 177,895 amid thin volumes, while USD/BRL climbed 0.70% to 5.14 on risk-off flows.
Vale gained 1.71% on firmer China demand signals, offsetting a 1.78% drop in Petrobras shares. The US decision to revoke Brazil’s ambassador visa in retaliation for stalled diplomatic approvals added volatility, with EUR/BRL rising 1.06% to 5.93. Short-term rates eased 0.76% to 14.39%, reflecting market anticipation of today’s policy move.
Commodity prices provided limited support, with WTI crude up 0.84% at $76.41.
The Day Ahead
Markets will focus on the Copom interest-rate decision scheduled for 13:30 ET, with consensus pointing to a 25-basis-point cut that would bring the Selic to 14.00%. The S&P Global Services PMI at 05:00 ET is expected to show continued expansion in the dominant services sector. Tomorrow’s trade-balance release at 10:00 ET is projected at $8.4 billion, down from June’s $9.76 billion, reflecting softer commodity shipments.
Traders will monitor any forward guidance on the pace of further easing given the 4.64% CPI reading. Local asset volatility may rise if the diplomatic spat with Washington intensifies ahead of Brazil’s October elections.
Other Economic Notes
Brazil’s 4.64% CPI reading leaves the central bank with limited room for aggressive cuts while still meeting its inflation target. Fiscal sustainability concerns persist as Congress debates spending caps ahead of the 2026 budget cycle. Commodity exports remain the key growth driver, with iron-ore and oil shipments providing a buffer against weaker domestic demand.
Real interest rates near 9.5% continue to attract portfolio inflows, supporting the BRL despite political noise. External vulnerability metrics have improved, yet any escalation in US-Brazil tensions could pressure capital flows and widen sovereign spreads.
