Turim Insights

The start of the monetary easing cycle in the United States, demand stimulus measures announced by the Chinese government, and fiscal challenges in Brazil were some of the highlights of this month’s Turim Insight webinar.

The global landscape has been characterized by a movement of interest rate cuts in developed economies, now including the United States. The Federal Reserve implemented a more aggressive first cut of 50 basis points (bps), amid divided expectations between -25 and -50 bps. Despite the decision, the committee has signaled that the ideal pace in upcoming meetings should be just 25 bps, provided economic data evolves as expected.

In China, the government announced a series of economic stimulus measures aimed at supporting the domestic economy, including monetary tools such as interest rate cuts and reductions in the reserve requirement ratio, as well as targeted actions for the real estate and stock markets. Furthermore, during an extraordinary meeting of the Politburo (the Chinese Communist Party leadership committee), Chinese President Xi Jinping indicated that we should expect further stimulus, including fiscal packages. The market reacted visibly with the appreciation of the Chinese stock market and iron ore.

In Brazil, the Central Bank raised interest rates by 25 basis points and delivered a hawkish message, linking the inflationary pressures projected in its forward-looking scenario, among other factors, to the high degree of economic overheating. The market is already pricing in a rate hike cycle of over 200 bps. This scenario tends to be challenging for the local stock market, although we still see some favorable arguments for allocating to this asset class, such as attractive prices, resilient economic growth, and the possibility of a benign external scenario, marked by interest rate cuts in major economies and stimulus in China.

The webinar featured Fernando Verboonen, CIO, Thiago Campos, Turim’s economist, and Eduardo da Rocha Lopes, Liquid Assets Analyst.