Dollar exceeds R$ 5.00 with IPCA-15 and Ibovespa exceeds 110 thousand points

O dollar spot rose strongly in the domestic market and closed again above R$5.00, at R$5.03, for the first time since May 8. The day was marked by a wave of global strengthening of the US currency. To the impasse surrounding the increase in the US debt ceiling, which needs to have an outcome by June 1st to ward off the risk of default, was added today the increased chances of a new interest rate hike by the Federal Reserve. already the Ibovespa was up 1.15%, to 110,054.38 points, and ended a sequence of three consecutive falls.

Analysts attribute the weak relative performance of the Brazilian currency to the increase in bets on cutting the Selic in August, in the wake of the stronger than expected deceleration of the IPCA-15 and statements by the president of the Central Bank, Roberto Campos Neto, in the afternoon.

The combination of the possibility of a tough stance by the US BC with Selic cuts reduces the internal and external interest rate differential – which tends to reduce the attractiveness of ‘carry trade’ operations. Operators claim that local funds rushed to reverse operations sold in dollar, in an attempt to limit losses, which contributed to boost the gains of the American currency here.

With a maximum of R$ 5.0443 (+1.82%), precisely in the midst of Campos Neto’s speech, the spot dollar ended the session this Thursday, 25, up 1.65%, quoted at R $5.0355 – highest closing value since May 2 (R$5.0467). After today’s surge, the currency accumulated an increase of 0.79% in the week and 0.96% in the month. In the year, the currency still has devaluation of 4.63%. The main thermometer of the appetite for business, the dollar futures for June had a strong turn, above US$ 16 billion.

The IPCA-15 decelerated from 0.57% in April to 0.51% in May, well below the median of the survey by the Estadão/Broadcast (+0.65%) and close to the bottom of estimates (0.48%). Economists highlighted the slowdown in cores and services. In the afternoon, Campos Neto said that the IPCA-15 was indeed positive, with “better nuclei” and commented on the possibility that the drop in wholesale food inflation spreads to retail “in a little while”.

The president of the BC, as usual, did not talk when asked about the possible start of a cut in the Selic rate, saying that it is “one vote in 9”, in reference to the composition of the Monetary Policy Committee (Copom). future interest rates, bets on a Selic rate cut in August became the majority.

“The market’s reading of the IPCA-15 is what opens the door for the Central Bank to assume a less harsh tone and may start the process of lowering interest rates at some point in the future. And this may reduce the currency carry “, says manager Bruno Martins, partner at Armor Capital, when commenting on the bad performance of the real in relation to its peers.

In the US, the Department of Commerce reported in the morning a revision of US GDP growth to 1.3% in the first quarter (annualized rate). The result was above the initial estimate of 1.1%, although it exceeded analysts’ projections (1.6%). The consumer spending price index (PCE) was also revised upwards. CME monitoring shows that the chances of a 25 basis point hike at the Fed’s June meeting are in the majority. Investors already show less conviction that interest rates could be cut later this year.

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Interrupting a sequence of three losses – a relatively short break, interspersed with 11 gains in the 12 sessions prior to the slight taking of profits -, the Ibovespa was close to neutralizing the effect of the adjustment by rising 1.15% today, to 110,054.38 points, on risk appetite recovery day in New York. Over there, gains reached 1.71% (Nasdaq) at the close of this Thursday, despite the pendency of a solution for raising the debt ceiling in the United States, with the approach of the deadline to avoid default, in a week in early June.

Today, optimism surrounding artificial intelligence strategies prevailed on Wall Street, which was decisive for the robust performance of Nvidia and big tech stocks, driving the rise of the S&P 500 (+0.88%) and Nasdaq indices in session.

“From mid-2021 to 2023, in the approximate interval of two years, the Ibovespa accumulated a retraction of around 25%, heavily discounted, anticipating a deterioration in macro conditions. It went from 130 thousand to less than 100 thousand, in the worst moments The market anticipates, and now the trend is towards decompression in the interest curve, with a more favorable perception of the fiscal conduct, and better projections for inflation and for the cost of credit, in the second half”, says Felipe Moura, partner and analyst at Finacap Investimentos.

“International investors were more predisposed to purchases than we anticipated, with the argument that ‘valuations’ in Brazil are more attractive compared to other emerging markets, and that Brazil tends to perform well when there is more clarity about cuts in interest rates”, points out Itaú BBA in a report on Brazilian stocks, released this Thursday.