Copom Starts Tomorrow: Focus Raises IPCA to 4.80% Above Ceiling — S&P Hits 7,165 ATH on Intel — BRL Holds Below R$5.00
Today’s Brazil morning call opens on the eve of the most consequential Copom meeting since the war began. This is part of The Rio Times’ daily Brazil Financial Morning Call, covering Latin American financial markets.
The week ended with a stark divergence. The S&P 500 surged to a new all-time high of 7,165.08 (+0.80%) on Friday, powered by Intel’s historic 23.6% surge — the chipmaker’s best day since 1987 — as AI demand for CPUs exploded beyond GPUs. The Nasdaq jumped 1.63% to a record 24,837. Nvidia crossed the $5 trillion market cap threshold. AMD soared 13.9%. The semiconductor index (SOX) posted its 18th consecutive winning session. The U.S. market is in a full AI-driven euphoria, with the war’s impact reduced to background noise.
Brazil told a different story. The Ibovespa fell 0.33% Friday to 190,745 — its fourth decline in five sessions and the first test below 190,000 intraday (low: 189,963). The index has lost 7,912 points (−3.98%) from its ATH of 198,657 and given back half of April’s gains. The MACD histogram deepened to −565.95 — more than double Thursday’s −260.60 — confirming the bearish regime. But the USD/BRL reversed sharply back below R$5.00 to R$4.9793 (−0.90%), proving that Thursday’s R$5.02 was a one-day overshoot and the structural carry bid is intact. The R$5.00 level has now been tested and rejected from above.
The BCB Focus Survey delivered Friday’s most consequential domestic data: IPCA 2026 forecast raised to 4.80% (from 4.71%) — now above the 4.50% target ceiling. Selic end-2026 raised to 13.00% (from 12.50%), implying only 175bp of cuts from 14.75% through year-end. Dollar forecast dropped to R$5.30 (from R$5.37). The IPCA revision above ceiling is the number that shapes tomorrow’s Copom: the BCB cannot signal aggressive easing when inflation expectations breach the tolerance band. Consensus expects a 25bp cut to 14.50% with cautious forward guidance. Copom meets April 28-29. Gerdau Q1 reports today. War Day 58.
Three Things That Matter
| Friday | S&P 500 +0.80% to 7,165 (NEW ATH). Nasdaq +1.63% to 24,837 (NEW ATH). Intel +23.6% (best day since 1987, Q1 revenue $13.6B crush). Nvidia +4.3% ($5T market cap). AMD +13.9%. SOX 18-day streak. X-Energy IPO +32% ($1B raised). Michigan Sentiment 49.8 (record low but above 47.6 initial). Michigan 1Y Inflation Expectations: 4.8% (up 100bp from 3.8%). Israel-Lebanon ceasefire extended 3 weeks. Dow flat. VIX elevated at ~20 despite ATHs (unusual). Ibovespa −0.33% to 190,745 (intraday low 189,963 — tested sub-190K). USD/BRL reversed to R$4.9793 (−0.90%) — back below R$5.00. Focus Survey: IPCA → 4.80% (above ceiling), Selic end-year → 13.00% |
| Weekend | Israel-Lebanon ceasefire extended 3 weeks (Trump announcement Thursday). No new Strait incidents over weekend. Iran maintained Strait “under its control” posture. Oil holding ~$97 WTI / Brent ~$100. Trump: no deadline for Iran talks, ceasefire remains indefinite. DOJ dropped investigation into Fed Chair Powell (removed political uncertainty). Kevin Warsh Senate hearing for Fed chair delayed. Earnings: 81% of S&P 500 reporters beat earnings, 76% beat revenue. BoJ decision tonight (cons: hold at 0.75%). Chile rate decision today (cons: hold 4.50%) |
| Today | COPOM EVE — meeting starts tomorrow (Apr 28-29). Selic at 14.75%. Consensus: 25bp cut to 14.50%. BCB Focus Readout (07:25 BRT). BRL Bank Lending (07:30). GfK German Consumer Climate (03:00, cons: −30.2). CBI Distributive Trades (06:00). Mexico Trade Balance (08:00). Dallas Fed Mfg (10:30). Bill/Note Auctions (11:30-13:00). ECB Schnabel (13:30). Chile Rate Decision (18:00, cons: hold 4.50%). BoJ Decision overnight (cons: hold 0.75%). Gerdau Q1 earnings today. Vale Q1 tomorrow. War Day 58 |
Where We Left Off FRIDAY, APR 25 — SESSION CLOSE
Friday’s session encapsulated the two-speed global market. In New York, the AI trade reached escape velocity. Intel surged 23.6% — its best single day since 1987 — after crushing Q1 expectations with $13.6B revenue and $0.29 EPS (vs $0.01 estimate). CEO Lip-Bu Tan highlighted that AI workloads actually favor CPUs over GPUs at scale in agentic applications, creating a paradigm shift. AMD rocketed 13.9%, Arm +14.7%, Qualcomm +10%. Nvidia crossed the $5 trillion market cap threshold. The SOX semiconductor index posted its 18th consecutive gain — possibly the longest on record. The S&P 500 closed at a fresh ATH of 7,165.08 (+0.80%), the Nasdaq at 24,837 (+1.63%). X-Energy’s IPO raised $1 billion — the largest nuclear offering ever — and surged 32%. For the week, the S&P posted its best performance since November.
Michigan Consumer Sentiment confirmed the consumer distress: the final April reading came in at 49.8, slightly above the 47.6 preliminary but still a record low. One-year inflation expectations surged to 4.8% — up a full percentage point from March’s 3.8% — the sharpest monthly jump since the 2022 cycle. As BMO’s Hartman noted: “if the shock to energy prices turns out to be more persistent, then we’re likely to see some upward pressure on core prices.” The VIX remained elevated near 20 despite ATHs — an unusual divergence that signals institutional hedging against the geopolitical risk even as equities set records.
In São Paulo, the Ibovespa continued its correction, falling 0.33% to 190,745 — touching 189,963 intraday, the first test below 190,000 since April 8. The MACD histogram deepened to −565.95, confirming the bearish momentum. But the critical development was the BRL: it reversed sharply from Thursday’s R$5.0245 overshoot back to R$4.9793 (−0.90%), decisively rejecting the R$5.00 level from above. As yesterday’s Morning Call flagged, the R$5.00 break was structural — and the market proved it by refusing to sustain above it even with oil elevated and the Ibovespa falling. The Focus Survey was the week’s domestic bombshell: IPCA 2026 raised to 4.80% (above the 4.50% ceiling), Selic end-year to 13.00% (implying only 175bp of cuts). The market is now pricing a much more cautious BCB than the April rally had assumed.
Market Snapshot DATA AS OF FRI, APR 25 CLOSE
| Indicator | Close / Level | Change |
|---|---|---|
| Ibovespa | 190,745 | −0.33% (−3.98% from ATH) |
| USD/BRL | R$4.9793 | −0.90% (back <R$5) |
| S&P 500 | 7,165 | +0.80% (NEW ATH) |
| Nasdaq | 24,837 | +1.63% (NEW ATH) |
| WTI Crude | ~$97 | Flat (week: +18%) |
| Focus IPCA 2026 | 4.80% | Above 4.50% ceiling |
| Focus Selic End-2026 | 13.00% | Up from 12.50% |
| Michigan Sentiment | 49.8 | Record low |
What to Watch MONDAY CATALYSTS
The Copom meeting begins tomorrow (April 28) and concludes Wednesday (April 29) — the pre-decision setup is the session’s dominant theme. Today’s Focus Readout at 07:25 BRT will confirm whether the hawkish IPCA 4.80% revision has hardened or softened over the weekend. Gerdau Q1 earnings today provide the first major corporate read into the war’s impact on Brazilian steel/commodity producers — a beat could stabilize the Ibovespa’s correction; a miss accelerates it toward the 187,197 SMA support.
The BoJ decision overnight (cons: hold at 0.75%) and Chile’s rate decision today (cons: hold at 4.50%) provide the global central bank backdrop. GfK German Consumer Climate at 03:00 (cons: −30.2) measures European consumer despair under the blockade. Dallas Fed Manufacturing at 10:30 is the last regional factory read before the FOMC blackout period. US 2-Year and 5-Year Note Auctions at 13:00 test fixed-income demand with yields elevated.
The week ahead is dominated by: Copom (Tue-Wed), Vale Q1 (Tue), Suzano Q1 (Wed), and in the U.S. — Alphabet, Microsoft, Meta, Apple, Amazon all report this week alongside FOMC. This is the most information-dense week of 2026 for Brazilian markets. The Ibovespa at 190,745 enters it 3.98% off its ATH with a bearish MACD, a hawkish Focus revision, and the carry trade still intact at R$4.98. The Copom’s guidance determines the next direction.
Ibovespa Setup TECHNICAL LEVELS
Friday: O:191,378, H:191,390, L:189,963, C:190,745 (−0.33%). MACD histogram at −565.95 — the bearish crossover is accelerating. RSI estimated near 62-63 (moderating from 64.86). The index tested sub-190K for the first time since April 8. The correction from 198,657 (−3.98%) has given back half of April’s gains. The three-session loss since reopening from Tiradentes totals 5,387 points (−2.75%).
Resistance: 190,745 (Friday close) → 191,378 (Thursday close) → 192,889 → 196,132 → 198,657 (ATH).
Support: 189,963 (Friday intraday low / 190K test) → 187,298 / 187,197 (Kijun-Tenkan convergence — major support) → 180,804 (lower Bollinger) → 159,531 (200-day).
Copom Watch SELIC AT 14.75% · MEETING STARTS TOMORROW
The Copom enters its most constrained meeting since the war began. The Focus Survey raised IPCA 2026 to 4.80% — above the 4.50% tolerance ceiling — which means inflation expectations have formally de-anchored from the target. The Selic end-year revision to 13.00% (from 12.50%) implies the market now expects only 175bp of easing through year-end, far less than the 225-250bp priced during the ceasefire euphoria two weeks ago. Oil at ~$97 WTI with the Strait still closed and no talks scheduled adds hawkish pressure.
Consensus expects a 25bp cut to 14.50% — but the guidance language is everything. Three scenarios: (1) Dovish 25bp — cut to 14.50% with forward guidance signaling continued gradual easing, citing BRL strength as inflation offset. This arrests the correction and the Ibovespa recovers toward 193,000-195,000. (2) Hawkish 25bp — cut to 14.50% but with language emphasizing “upside inflation risks,” de-anchoring concerns, and geopolitical uncertainty. This confirms the correction and the index tests 187,197 support. (3) Hold at 14.75% — a surprise hawkish pause citing Focus above ceiling, oil above $95, and Strait uncertainty. This sends the Ibovespa toward 185,000-187,000 and triggers a broader EM selloff.
The BRL at R$4.98 remains the BCB’s strongest ally. The dollar’s inability to sustain above R$5.00 even with oil elevated and the index correcting proves the carry trade is structural, not sentiment-driven. R$68 billion in foreign inflows YTD, a weak DXY, and the 14.75% rate differential provide the BRL floor. The Copom can cut 25bp and still maintain the carry trade’s attractiveness — the question is whether the forward guidance opens or closes the June window.
Economic Calendar MONDAY, APR 27
| Time | Event | Impact |
|---|---|---|
| Pre-Market | Japan Leading Index (01:00). GfK German Consumer Climate (03:00, cons: −30.2). UK CBI Distributive Trades (06:00, cons: −42). South Africa holiday (Freedom Day). Japan coincident indicator. BoJ decision expected overnight (cons: hold 0.75%) | MEDIUM |
| 07:25–08:00 BRT | BCB Focus Market Readout (07:25 — IPCA, Selic, BRL forecasts pre-Copom). BRL Bank Lending (07:30). Mexico Trade Balance (08:00). Gerdau Q1 earnings — first major Brazilian corporate read on war impact | CRITICAL |
| 10:30–13:30 | Dallas Fed Manufacturing (10:30, prev: −0.2). US 3/6-Month Bill Auctions (11:30). US 2-Year and 5-Year Note Auctions (13:00). ECB Schnabel speaks (13:30). Fixed-income demand test with elevated yields | MEDIUM |
| 18:00–23:00 | Chile Rate Decision (18:00, cons: hold 4.50%). BoJ Rate Decision + Outlook Report (22:30-23:00, cons: hold 0.75%). Japan Unemployment (19:30, cons: 2.6%). COPOM MEETING STARTS TOMORROW — first day April 28, decision April 29 | HIGH |
Latin America Markets FRIDAY CLOSE
| Index | Close | Change | Signal |
|---|---|---|---|
| Ibovespa | 190,745 | −0.33% | MACD Bearish |
| IPC (Mexico) | ~68,500 | −0.2% (est) | Neutral |
| COLCAP (Colombia) | ~2,245 | Declining | Bearish |
| MERVAL (Argentina) | ~2,820,000 | Declining | Bearish |
The LatAm correction deepened across the board last week. The Ibovespa posted its second consecutive losing week, now 3.98% off its ATH. Colombia’s COLCAP has been the worst regional performer as oil-sector uncertainty weighs on the petro-economy. Argentina’s MERVAL continues sliding below 3 million. The week ahead brings the Copom as the defining catalyst: a dovish cut arrests the LatAm correction; a hawkish hold or guidance sends it deeper. As covered in the latest LATAM Pulse, the week’s earnings barrage (Gerdau, Vale, Suzano in Brazil; Mag 7 in the U.S.) provides the fundamental backdrop the region needs to stabilize.
Commodities & FX KEY MOVES
Oil remained elevated near $97 WTI / $100 Brent — the Strait closure persists and no talks are scheduled. The ceasefire is indefinite but the blockade is the market’s binding constraint. Citigroup’s $110 scenario remains the upside risk if the standoff extends through May. Energy stocks are the only sector insulated from the broader LatAm correction.
USD/BRL at R$4.9793 — back below R$5.00 after Friday’s 0.90% reversal. The dollar’s failure to sustain above R$5.00 is the week’s most important FX signal: the carry trade at 14.75%, the R$68B in YTD foreign inflows, and the weak DXY are structural forces that dominate the daily noise. The R$5.00 level is confirmed as strong resistance.
Gold and Bitcoin remain in risk-on positioning. BTC near $78K, gold near $4,700-4,900. The VIX at ~20 with the S&P at ATHs reflects the unusual cocktail of institutional confidence in AI earnings + hedging against war risk — a duality that defines the current market regime.
Risk Map BULL vs BEAR
| Bull Case | Bear Case |
|---|---|
| The BRL’s rejection of R$5.00 from above proves the carry trade is structural — Even with oil at $97, the Ibovespa correcting 4%, and Iran tensions elevated, the real refused to break above R$5.00. R$68B in YTD inflows don’t reverse on daily noise. The 14.75% Selic (even at 14.50% post-cut) is the highest real rate in EM. This is the floor for Brazilian assets.
The Copom’s 25bp cut stabilizes the market by confirming the easing cycle is alive — A cut from 14.75% to 14.50% with measured forward guidance would signal: (1) the BCB is confident in the disinflation trajectory, (2) the carry trade remains attractive, and (3) June remains in play if conditions improve. This is what the market needs to arrest the correction. The S&P at 7,165 with 81% of companies beating earnings is a global tailwind — The AI boom is real. Intel +23.6%, Nvidia $5T, SOX 18-day streak. Alphabet, Microsoft, Meta, Apple, Amazon all report this week. If Mag 7 earnings beat, the global risk-on tide lifts all EM boats — including the Ibovespa. |
Focus IPCA at 4.80% above the ceiling means the BCB is trapped — Inflation expectations have formally de-anchored. The BCB cannot aggressively signal easing when the market’s own forecast breaches the tolerance band. Even a 25bp cut may come with language so cautious it effectively closes the June window. If the Copom surprises with a hold, the Ibovespa tests 187K.
The Ibovespa’s MACD bearish crossover is accelerating — the correction may have further to run — Histogram at −565.95, doubling the prior session’s −260.60. The index tested sub-190K intraday. The ATH of 198,657 is now 4% away. Without a catalyst (Copom, earnings, oil drop), the path of least resistance is toward the 187,197 SMA convergence — which would erase the entire April gain. Michigan inflation expectations at 4.8% + oil at $97 = the global rate-cut narrative is under threat — If the Fed can’t cut because consumer expectations are de-anchoring, and the BCB can’t cut because Focus is above ceiling, then the “dovish pivot” that powered the ceasefire rally is dead. The war’s inflation damage may prove more durable than the market assumed. Higher for longer globally means lower equity multiples and a slower EM recovery. |
Positioning BOTTOM LINE
Week 9 of the war begins with the most consequential week for Brazilian markets since the conflict started. The Copom meets tomorrow with inflation expectations above the ceiling, the Ibovespa 4% off its ATH, oil near $100, and the Strait still closed. The Focus revision to 4.80% IPCA / 13.00% Selic end-year has fundamentally repriced the easing cycle — from the 225-250bp of cuts the April euphoria imagined, to 175bp of cautious, data-dependent moves. The BCB’s task is surgical: deliver a 25bp cut that maintains credibility on the inflation target while preserving the carry trade’s structural appeal.
The Ibovespa at 190,745 is at an inflection point. The 190,000 level held on Friday (barely — intraday low 189,963). Below it, the 187,197 SMA convergence is the next major support, which would erase April’s entire gain. Above it, the Copom provides the catalyst to recover toward 193,000-195,000. The BRL’s decisive rejection of R$5.00 from above provides the structural floor that the equity market needs: even in the worst week since the ceasefire, the carry trade held.
This week resolves the ambiguity. The Copom’s guidance. Vale’s earnings. The Mag 7 results. The Strait’s status. By Friday, we will know whether the ceasefire rally was a structural rerating (in which case the correction is a buying opportunity and 200,000 is still the destination) or a momentum overshoot (in which case the correction extends toward 185,000-187,000 and the 200,000 target is deferred to H2). Position for the Copom. Watch the guidance language, not just the rate. And remember: the carry trade at R$4.98 — proven structural by Friday’s reversal — remains the core thesis for Brazilian assets. The war continues. The market adapts. And the BCB decides tomorrow whether to lead or follow.
RT Staff Reporters · This newsletter is for informational purposes only and does not constitute investment advice. Always consult a licensed financial advisor before making investment decisions. Past performance does not guarantee future results.