Turim Insights

Monetary policy has been a central topic in developed economies, which are nearing the end of the interest rate hike cycle. Meanwhile, some emerging countries have already started cutting their rates. This was one of the highlights of this month’s #VisãoTurim.

In early August, the US interest rate market showed a sudden rise in long-term rates, reflecting a series of factors such as the country’s credit rating downgrade, the expansion of public debt issuance, and even the Bank of Japan’s decision to loosen its yield curve control policy. In Brazil, interest rates reflect the cutting cycle implemented by COPOM, which surprised the market with a more timely move than indicated in the previous statement.

Meanwhile, the stock market continues to prove relatively resilient, especially considering valuations. The current pricing seems consistent with a “goldilocks” scenario – where inflation converges to target without a severe recession. Recent economic data, such as benign inflation and sustained activity, help explain the market’s “optimism.”

As for the exchange rate, the rise in US interest rates triggered a new round of a strong dollar, leading to the depreciation of several currencies, including the Real, which had been performing well since the beginning of the year.

Participants in the webinar included Eduardo Gomes de Almeida, co-CEO; Nelson Abrahao, Partner and Strategist; Henrique Santos, CFA, Portfolio Manager; and Pedro Hokama, Head of Liquid Assets.