Brazil Rally Deepens on Inflation Surprise, Copom Signal and U.S. Shutdown Progress

Overview

• Brazil’s October IPCA rose 0.09%, the weakest October reading since 1998, taking 12‑month inflation to 4.68%, below prior forecasts.
• The Copom minutes said the 15% Selic is sufficient to bring inflation to target if held for a prolonged period, while noting fiscal risks and preliminarily factoring the new income‑tax changes.
• The Ibovespa advanced for a 15th straight session and logged a 12th consecutive record, closing at 157,749 points as banks and other domestically exposed stocks outperformed.
• The dollar fell for a fifth day to about R$5.27, its lowest since June 6, 2024, while DI futures declined across key nodes such as 2027, 2029 and 2031 maturities.
• Risk appetite improved after the U.S. Senate passed a temporary funding bill now headed to the House, as investors increasingly price the possibility of Selic cuts as early as the first quarter of 2026, contingent on sustained disinflation and external stability.