Turim Insights

The November #VisãoTurim webinar featured Henrique Santos, CFA, Partner and Portfolio Manager at Turim; Pedro Hokama, Partner and Head of Liquid Assets; and Thiago Campos, Turim’s Economist, in a conversation about the recent impacts of the U.S. government shutdown, the Federal Reserve’s current policy dilemma, the trade tensions between the U.S. and China, and the outlook for the Brazilian economy.

In the #UnitedStates, the longest shutdown in history is expected to reduce GDP by roughly 1% in the fourth quarter, although most of this effect should be offset by a stronger rebound in the first quarter of next year. The shutdown also prevented the release of important economic statistics, increasing uncertainty in the current macroeconomic environment.

With Inflation still slightly above target (even excluding the effect of the Rates) and signs of gradual cooling in the labor market, the FOMC has adopted a cautious stance, signaling that it may refrain from cutting Interest Rates in December.

In #Brazil, the moderation in economic activity is already reflected in growth projections slightly above 2% for 2025, a level much closer to estimates of potential GDP than what has been observed over the past four years.

Even so, the Central Bank remains prudent, indicating that it is in no rush to begin an easing cycle, even as it acknowledges progress in disinflation and economic activity. Market pricing for Interest Rates suggests a smaller-than-usual cutting cycle (less than 300 bps), beginning early next year.

In the Exchange Rate market, the trend of a weaker dollar and declining volatility has supported carry trade strategies and explains an important share of the real’s appreciation this year.

A similar dynamic can be seen in Equities, where the performance of the Ibovespa has largely followed global market sentiment, despite local uncertainties related to next year’s elections.