Turim Insights

Global inflation moderation, U.S. recession risks, and the potential economic and fiscal impacts of the U.S. elections were some of the highlights of this month’s Turim Insights webinar.

The global landscape continues to show signs of inflation moderation, although recession risks are increasing in the United States. One of the main reasons for this concern lies in the moderation of the labor market, including the rise in the unemployment rate. However, it’s worth noting that the rise in the rate in July was exclusively driven by an increase in the number of people looking for work, rather than new layoffs.

In this context, the Federal Reserve kept interest rates unchanged but signaled the possibility of future cuts in response to a better balance between its dual mandates (inflation on target and full employment). Meanwhile, the Bank of Japan continued the “normalization” of its monetary policy, raising the base rate to 0.25% per year, contributing to the worsening global market sentiment.

On the political front, the U.S. presidential elections are in the spotlight. Kamala Harris has emerged as the leading Democratic candidate after Biden’s withdrawal and is now virtually tied with Donald Trump in the polls.

In Brazil, the scenario remains complex, with high fiscal risk and inflationary pressures. Additionally, unanchored expectations and a depreciated currency could lead the Central Bank’s Monetary Policy Committee (COPOM) to raise interest rates again in the near future, as highlighted in the minutes of the last meeting.

The local market continues to underperform its peers, including the stock market, which continues to deliver disappointing returns despite cheap valuations. The recovery of the stock market will largely depend on capital flows, both foreign and domestic, which in turn are influenced by interest rates in the United States and Brazil.