WEEKLY REPORT
Copom minutes reinforce caution, while the U.S. labor market remains resilient | 05/08
✅ On the domestic front, the week was marked by the release of the Copom minutes, which reinforced and expanded on the hawkish message already conveyed in the statement accompanying the latest policy decision. The document placed greater emphasis on the deterioration of the inflation risk balance, highlighting both risks that have already materialized and still-latent risks. As such, we continue to expect Copom to maintain a cautious stance in upcoming meetings, with a gradual continuation of the easing cycle, taking the terminal policy rate in 2026 to 13.00%.
✅ On the international front, U.S. labor market data continued to reinforce the view of a gradual moderation process, but still without signs of abrupt deterioration. Taken together, the data continue to point to a labor market that remains solid, still supporting income growth and consumption, but undergoing a gradual and orderly adjustment, without evidence of a sufficiently sharp weakening that would materially alter the Federal Reserve’s cautious stance.
✅ In the Middle East, the week was marked by alternating episodes of military escalation in Hormuz and incremental progress in negotiations between the United States and Iran, keeping uncertainty around global oil flows elevated. In our view, despite the recent relief, the situation remains fragile, with meaningful risks of renewed escalation and the persistence of an important upside risk to global inflation through the energy channel.
