🔆 BUYSIDEBRAZIL | WEEKLY REPORT Caution remains elevated globally amid deadlocked Middle East negotiations, while inflationary risks become increasingly evident – 05/22
✅ In a lighter week for domestic economic data releases, the main highlight was the March IBC-Br activity index, which reinforced the perception that the Brazilian economy is beginning to show clearer signs of losing momentum after a positive start to the year. Despite the negative surprise in March, the IBC-Br closed the first quarter up 1.3% QoQ, broadly in line with our 1.2% GDP growth forecast for the period.
✅ In the United States, market attention this week centered on the FOMC minutes, which reinforced a more hawkish stance by the Federal Reserve amid persistent inflationary pressures and rising global uncertainty. Overall, the minutes suggest a Fed that is increasingly uncomfortable with initiating an easing cycle in the near term, with a meaningful share of participants even acknowledging the possibility of additional rate hikes should disinflation lose traction again.
✅ In the Middle East, the week was marked by repeated attempts to restart negotiations between the United States and Iran, though without meaningful progress on the key deadlocks, particularly regarding uranium enrichment and control of the Strait of Hormuz. Although markets have started to partially discount Trump’s more immediate threats, the overall backdrop continues to support higher energy prices and amplify concerns over more persistent impacts on global inflation, supply chains, and monetary policy across major economies.
