2 cents bfr the opng – Balancing act

The recent news flow is supporting my call that the fiscal announcement should emerge as a marginal positive trigger for local markets as it suggests the headline of some R$70b (2025 + 2026) formed by a wide range of measures.

The announcement is expected now to take place this Thursday.

Should it be confirmed, I believe markets would find quantitave and qualitative reasons and room to alleviate from the current levels (please read How picky is local market with the fiscal anyway?), however there is a world out there…

Global markets are staggering under the strain of looming U.S. trade tariffs, intensifying an already fragile investment climate. Even for the US markets, what began as a post-election rally fueled by optimism and risk-on sentiment has now collided with a wall of uncertainty, leaving investors to navigate a dramatically altered landscape.

The global price action seems to be weighting more the odds of (i) rising inflationary pressures, (ii) tightening monetary policies, and (iii) the persistent threat of U.S. tariffs, brewing fears of a perfect storm of market volatility where confidence seems to be giving way to caution.

Even dovish Powell seems to be dithering, emphasizing patience on rate cuts due to the economy's resilience

In all, a landscape of surging bond yields and USD is not supportive (please read Global Macro Rules)

Balancing them all together and having to call for a market direction is getting more puzzling than usual (please read Not quite my tempo).

For tactical trading, I still like BRL crossed with virtually every one, but the USD.

Tots?

Have a great week!

Daniel Cunha