Overview

• The Monetary Policy Report cut the 2026 GDP forecast to 1.5% and concludes high interest rates are cooling activity, strengthening the case for eventual rate cuts.
• Recent readings show services inflation easing on a three‑month basis and labor indicators softening at the margin, aligning with the BC’s disinflation narrative.
• A renewed shift in expectations for the Fed’s easing cycle over the past two sessions lifted Treasury yields and pressured Brazil’s futures rates, the real and equities.
• Market desks cite the likelihood of a ‘casadão’ of up to US$600 million to handle roughly 11,544 FX swap contracts maturing in early October and to temper currency swings.
• The U.S. tariff dispute is headed to the Supreme Court with arguments expected in early November, while banks estimate a modest direct hit to Brazil’s GDP near 0.1% and investors monitor reported pressure on Fed independence.