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Brazil’s Financial Morning Call for June 27, 2025

2 weeks ago 4

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Brazil’s financial markets are set for a pivotal session today, shaped by a dense Latin American economic calendar and select global indicators that could steer investor sentiment.

The Central Bank of Brazil’s (BCB) Selic rate hike to 15% on June 18, 2025, continues to drive market dynamics, targeting inflation above the 3% ceiling while increasing borrowing costs.

This policy, against a 76.2% public debt-to-GDP ratio and a projected R$104 billion fiscal deficit for 2025, supports the Brazilian real through carry trade but pressures sectors like retail and construction.

Today’s economic agenda is critical, providing insights into regional labor markets, fiscal health, and global commodity demand.

Key Latin American events include Brazil’s Unemployment Rate (May), released at 7:00 AM EST (8:00 AM BRT), which is expected at 6.4% and signals strength in the consumer sector.

The IGP-M Inflation Index (June) will be published at 6:00 AM EST (7:00 AM BRT), providing a measure of wholesale inflation. Bank Lending data (May) comes out at 6:30 AM EST (7:30 AM BRT), offering insight into credit conditions.

Brazil’s Financial Morning Call for June 27, 2025

Federal Tax Revenue (May) will be released at 8:30 AM EST (9:30 AM BRT) and is critical for ongoing fiscal debates. Lastly, the CAGED Net Payroll Jobs report (May) is due at 12:30 PM EST (1:30 PM BRT), serving as an indicator of job growth. Mexico’s Unemployment Rate (May) at 7:00 AM EST (8:00 AM BRT) will reflect regional stability.

Globally, key events like the French CPI (Jun) and Spanish CPI (Jun) at 1:45 AM and 2:00 AM EST, respectively, alongside the EU Leaders Summit at 5:00 AM EST, and U.S. Core PCE Price Index (May) at 7:30 AM EST, will shape export demand and currency trends.

These events are crucial as the Ibovespa trades near 137,113.89, the real hits an eight-month high, and commodities face global demand pressures.

Economic Agenda

Latin America (All Events)

Brazil

6:00 AM EST / 7:00 AM BRT – IGP-M Inflation Index (MoM) (Jun): Consensus -1.02%, previous -0.49%. Tracks wholesale inflation, shaping BCB policy expectations.
6:30 AM EST / 7:30 AM BRT – Bank Lending (MoM) (May): Actual TBD, previous 0.7%. Reflects credit availability under high Selic rates.
7:00 AM EST / 8:00 AM BRT – Unemployment Rate (May): Consensus 6.4%, previous 6.6%. Signals labor market strength, impacting consumer sectors.
8:30 AM EST / 9:30 AM BRT – Federal Tax Revenue (May): Actual TBD, previous 261.30B. Gauges fiscal capacity amid tax policy debates.
12:30 PM EST / 1:30 PM BRT – CAGED Net Payroll Jobs (May): Consensus 179.00K, previous 257.53K. Indicates job growth, vital for economic sentiment.

Mexico

7:00 AM EST / 8:00 AM BRT – Unemployment Rate (May): Actual TBD, previous 2.60%. Reflects regional labor market health, supporting Brazil’s exports.
7:00 AM EST / 8:00 AM BRT – Unemployment Rate n.s.a. (May): Consensus 2.50%, previous 2.50%. Signals stability, influencing regional sentiment.

Rest of the World (Key and Second-Tier Events)

France (Key)

1:45 AM EST / 2:45 AM BRT – French CPI (YoY) (Jun): Actual 0.9%, consensus 0.7%, previous 0.7%. Higher inflation may curb commodity demand.
1:45 AM EST / 2:45 AM BRT – French HICP (YoY) (Jun): Actual 0.8%, consensus 0.7%, previous 0.6%. Influences EU monetary policy, affecting trade.

Spain (Key)

2:00 AM EST / 3:00 AM BRT – Spanish CPI (YoY) (Jun): Actual 2.2%, consensus 2.0%, previous 2.0%. Signals inflation, impacting commodity exports.
2:00 AM EST / 3:00 AM BRT – Spanish HICP (YoY) (Jun): Actual 2.2%, consensus 2.0%, previous 2.0%. Influences EU policy, impacting Brazil.

Eurozone (Key)

2:00 AM EST / 3:00 AM BRT – Core CPI (YoY) (Jun): Actual 2.2%, previous 2.2%. Stable inflation influences ECB policy, impacting exports.
5:00 AM EST / 6:00 AM BRT – EU Leaders Summit: Actual TBD. Shapes EU trade policies, critical for Brazil’s commodity exports.

United States (Key)

7:30 AM EST / 8:30 AM BRT – Core PCE Price Index (MoM) (May): Consensus 0.1%, previous 0.1%. Tracks inflation, influencing commodity prices.
7:30 AM EST / 8:30 AM BRT – Core PCE Price Index (YoY) (May): Consensus 2.6%, previous 2.5%. Signals inflation trends, impacting trade.
7:30 AM EST / 8:30 AM BRT – PCE Price Index (YoY) (May): Consensus 2.3%, previous 2.1%. Affects commodity demand sentiment.
7:30 AM EST / 8:30 AM BRT – Personal Income (MoM) (May): Consensus 0.3%, previous 0.8%. Reflects consumer strength, impacting exports.
7:30 AM EST / 8:30 AM BRT – Personal Spending (MoM) (May): Consensus 0.1%, previous 0.2%. Signals demand for Brazilian goods.

Canada (Second-Tier)

7:30 AM EST / 8:30 AM BRT – GDP (MoM) (Apr): Consensus 0.0%, previous 0.1%. Reflects economic health, impacting protein exports.

Brazil’s Markets Yesterday

On June 26, 2025, Brazil’s B3 stock market saw the Ibovespa rise 0.99% to 137,113.89 points, reversing recent losses.

The rally was driven by Congress blocking a proposed IOF tax hike, a historic rejection of a presidential decree, and the IPCA-15 inflation preview rising 0.26% in June, below forecasts and the slowest pace for the month since 2023.

This eased concerns about further monetary tightening, boosting equities. Vale surged over 3%, fueled by a rebound in Chinese iron ore prices, while Petrobras gained on modest Brent crude increases.

Cyclical stocks like Azzas 2154 and Vivara outperformed, benefiting from lower interest rate expectations. However, Localiza dropped over 7% amid government talks on industrial tax cuts for small cars, potentially squeezing car rental margins. Grupo Vamos and Vibra Energia also declined.

U.S. Markets Yesterday

U.S. stocks neared record highs on June 26, 2025, supported by positive economic data. The S&P 500 rose 0.8% to 6,141.02, just 0.05% shy of its February peak. The Dow Jones Industrial Average climbed 0.9% to 43,386.84, and the Nasdaq gained 1% to 20,167.91.

The Russell 2000 advanced 1.7% to 2,172.11. McCormick led gains after a strong profit report, while easing Treasury yields followed better-than-expected U.S. jobless claims and durable goods orders data.

Mixed performance in Europe and Asia reflected global caution, but U.S. resilience supported Brazilian commodity exports and the real’s strength.

Brazilian Real

The Brazilian real hit an eight-month high on June 26, 2025, with the dollar falling as policy shifts, including the blocked IOF tax hike, bolstered sentiment. Technical indicators suggest further upside. Today’s Unemployment Rate and Federal Tax Revenue will guide currency expectations.

Oil Prices

Oil prices paused losses on June 26, 2025, with Brent holding at $66 per barrel, supported by tight supply despite fading geopolitical risks. This aids Petrobras’ revenues. Today’s U.S. Core PCE Price Index will signal demand for Brazil’s energy sector.

Gold Prices

Gold retreated on June 26, 2025, as the dollar hit a three-year low and technical breakdowns accelerated. Geopolitical risks still support Brazil’s mining sector, including Vale. Today’s French and Spanish CPI data will influence safe-haven flows.

Silver Prices

Silver held firm on June 26, 2025, driven by supply strains and surging industrial demand. This supports Brazil’s mining exports. Today’s U.S. Personal Spending will guide metal demand expectations.

Copper Prices

Copper prices rallied on June 26, 2025, defying weak demand due to speculation and supply squeezes. This boosts Vale’s revenues. Today’s U.S. Core PCE Price Index will clarify industrial demand.

Cryptocurrencies

Bitcoin held above key support on June 26, 2025, near $106,000, as ETF inflows provided stability. This benefits Brazil’s fintech sector, including Mercado Livre and XP Inc. Today’s U.S. Personal Spending will influence risk appetite.

Iron Ore Prices

Iron ore prices steadied on June 26, 2025, amid weak Chinese demand, with markets awaiting clearer direction. This supports Vale’s outlook. Today’s U.S. Personal Income will signal commodity demand.

Industry Outlook

Brazil’s agribusiness sector, contributing 27.4% to GDP in 2024, navigates challenges from the 15% Selic rate, which increases borrowing costs for farmers and exporters.

Fiscal strains, with a R$104 billion deficit and a 76.2% debt-to-GDP ratio, are compounded by rising public spending and investor unease.

Despite record tax revenue and lower inflation, rising imports and sector-specific pressures, such as tax policy shifts and renewable energy barriers, weigh on stability.

Today’s U.S. Core PCE Price Index, Mexico’s Unemployment Rate, and EU Leaders Summit will shape export demand and currency trends for Brazil’s commodity-driven industries. Below are key developments impacting the market:

Congress Approves New Seats, Raising Costs

The Brazilian Congress’s approval of 18 new seats increases public spending, exacerbating fiscal pressures and raising concerns about budget sustainability amid a 76.2% debt-to-GDP ratio.

Wind and Solar Sector Faces Barriers

Brazil’s wind and solar energy boom, a key growth area, is stalled by regulatory and infrastructural hurdles, impacting renewable energy stocks and long-term energy transition goals.

Wealth Flight Signals Investor Unease

Record wealth flight, with millionaires exiting Brazil, underscores investor concerns about economic stability, pressuring market sentiment and capital flows.

Congress Rejects IOF Tax Hike

Congress’s historic rejection of the IOF tax hike provides temporary relief for markets, boosting equities like Vale and cyclical stocks, but highlights ongoing fiscal policy tensions.

Fiscal Challenges Require Major Reforms

Brazil’s R$104 billion fiscal deficit and high debt-to-GDP ratio demand significant reforms, as warned by the World Bank, impacting investor confidence and market stability.

Tax Revenue Hits Record High

May’s record tax revenue, driven by imports and tax changes, offers fiscal relief, but rising imports and a deeper current account deficit strain economic stability.

Inflation Cools, Boosting Equities

June’s IPCA-15 inflation at 0.26%, the lowest for the month since 2023, eases monetary tightening fears, supporting cyclical stocks like Azzas 2154 and Vivara, though living costs remain high.

Car Rental Sector Faces Tax Pressures

Proposed tax cuts on small cars threaten margins for car rental firms like Localiza, which fell 7% on June 26, 2025, reshaping the automotive sector’s outlook.

Explanation of EST

Eastern Standard Time (EST) is the time zone used in the eastern United States, including New York, Washington, D.C., and Miami, set at UTC-5, five hours behind Coordinated Universal Time (UTC).

EST is applied here for consistency, as requested, and is the standard for U.S. financial markets, influencing global trading schedules.

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