Brazil’s Financial Morning Call for Tuesday, May 5, 2026

Iran Attacks UAE · Fujairah Fire · Project Freedom · Ibovespa −0.9% · Brent $114 · Copom Ata Today · ISM Services Today · Itaú/Bradesco Q1 · Warsh in 10 Days · War Day 66

Where We Left Off MONDAY, MAY 4 — CEASEFIRE COLLAPSE

Monday shattered the fragile optimism that had built over the holiday weekend. The session began constructively — the Ibovespa opened at 187,318, matching Thursday’s close, and touched 187,666 within the first hour as markets priced the positive US backdrop (S&P/Nasdaq records, oil at $108). Then the UAE missile alerts hit the tape. Iran’s coordinated attack on the Emirates — 12 ballistic missiles, 3 cruise missiles, 4 drones — was the first strike on a US ally since the April 8 ceasefire. The Ibovespa reversed sharply, falling through the Kijun at 187,197 and the 186K handle before finding support at 185,538. The close at 185,600.12 (−0.92%, −1,717.52 points) puts the index 1,597 points below the Kijun — not as deep as the 184,504 panic low from April 29, but dangerously close. The MACD histogram deepened to −1,450.44, and RSI signal collapsed to 41.83.

The geopolitical situation has deteriorated structurally. The ceasefire that held from April 8 to May 4 — roughly four weeks — appears over. Iran’s strikes on Fujairah oil hub mark the first infrastructure hit in weeks. The US response — Project Freedom, a named naval operation with guided-missile destroyers and 100+ aircraft — signals the Pentagon is now committed to reopening Hormuz by force if necessary. CENTCOM said two US-flagged ships successfully transited. Iran’s IRGC warned it would attack any US warship approaching the strait. Six Iranian boats were destroyed by US helicopters. The fog of war is thick: Iran claimed a US frigate was hit near Jask; CENTCOM denied it. The important read is directional: both sides are escalating, not de-escalating. The ceasefire is functionally dead.

Brent surged 5.8% to $114.44 — erasing the entire $108 pullback from Friday. WTI rose 4.4% to $106.42. Goldman raised its Q4 Brent forecast from $80 to $90, implicitly conceding that its $80 base case — which assumed Hormuz normalization by June — is dead. The S&P 500 fell 0.41% to 7,200.75, with energy the only positive sector (+0.95%). The Dow dropped 557 points (−1.13%), led by Home Depot (−3.5%) and Nike (−3.0%). The 10-year yield rose 6bp to 4.438%. Gold fell 1.4% to $4,580 as higher rate expectations dominated the war premium. The BRL weakened marginally to R$4.9644 but held below R$5.00 — remarkable resilience given the geopolitical backdrop.

Market Snapshot DATA AS OF MON, MAY 4 CLOSE

What to Watch TUESDAY CATALYSTS

The Copom ata at 12:00 BRT is the day’s most important release — but it must now be read through a fundamentally different lens. The minutes were written in the context of the April 29 decision, when Brent was at $118 and the ceasefire was intact. Today, the ceasefire has collapsed, Iran has attacked the UAE, the US is running a named naval operation in Hormuz, and Brent is back at $114 with upside risk. The ata’s revelations about dissent, oil assumptions, and June guidance will be market-moving — but the market will instantly recalibrate whatever it reads against the new escalation. If the ata reveals a pause discussion, the market will price June as a certain hold. If it shows unanimous continued easing, the market will ask whether that consensus survives the ceasefire collapse.

ISM Services PMI at 15:00 ET (cons: 53.7) is the services-side inflation test. After ISM Manufacturing Prices surged to 84.6 on Friday, the services prices component (prev: 70.7) is the next reading. If services prices also spike above 75, the stagflation narrative hardens further. JOLTS at the same time (cons: 6.86M) provides the labor market read. A combination of ISM Services miss + JOLTS decline would be the first demand-weakness signal — potentially positive for rate-cut expectations but negative for growth.

Itaú and Bradesco Q1 earnings set the domestic equity tone. The two largest private banks are the Ibovespa’s heaviest-weighted stocks. Strong net interest income (driven by high Selic) and stable asset quality would provide a floor for the index. Any guidance citing oil-driven credit deterioration would amplify the selloff. ECB President Lagarde speaks at 13:30 ET — her first public comments since the ceasefire collapse. Any hawkish shift on oil-driven inflation expectations would spill into global rates. FOMC Governor Bowman at 15:00 ET and Vice Chair Barr at 17:30 are the day’s Fed speakers.

Focus IPCA at 5.0% is now the new baseline. Monday’s Focus survey delivered the eighth consecutive weekly increase, pushing the 2026 IPCA median to 5.0% — breaching the psychological threshold for the first time. The gap between Focus (5.0%) and the BCB’s own projection (4.6%) is now 40bp, and the gap to the 3.0% target is 200bp. This fundamentally constrains the Copom’s forward guidance regardless of what the ata says.

Ibovespa Setup TECHNICAL LEVELS

Monday: O:187,317.55, H:187,666.20, L:185,537.58, C:185,600.12 (−0.92%, −1,717.52). The Ibovespa opened at Thursday’s close, rallied briefly to 187,666, then sold off steadily as the UAE missile headlines broke. MACD: main line at 1,631.31, signal at 180.87, histogram at −1,450.44 — the histogram is essentially unchanged from Thursday (−1,394), confirming the bearish regime is persistent rather than accelerating. RSI at 56.65, signal at 41.83 — the signal has slipped back below 42, reaffirming the downtrend. The main RSI’s slow descent from 58.79 to 56.65 confirms the gradual mean-reversion lower continues.

Resistance: 185,600 (Monday close) → 187,197 (Kijun — LOST AGAIN) → 187,666 (Monday high) → 189,668 → 190,794 → 198,658 (ATH).

Support: 185,538 (Monday low) → 184,759 (Apr 30 low) → 184,504 (Apr 29 panic low — KEY) → 183,380 (cloud base) → 183,263 (Mar 25 swing low) → 161,041 (200-day SMA).

Copom Watch SELIC AT 14.50% · ATA TODAY 12:00 BRT

The Copom ata arrives at 12:00 BRT into a fundamentally transformed environment. When the BCB wrote these minutes on April 29, the ceasefire was intact, Brent was at $118, and oil had not yet spiked to $126. Today, the ceasefire has collapsed, the UAE has been attacked, the US is running a naval operation in Hormuz, and Brent is at $114 after touching $126 last week. Focus IPCA has breached 5.0%. The ata is simultaneously the most important and least forward-looking document the market will read this week — its analysis is already outdated by events.

Three questions the ata must answer: (1) Did any members advocate for a pause instead of a cut? If yes, the market will price June as a hold with near-certainty. (2) What oil-price assumptions underpin the BCB’s IPCA projections? The reference scenario used R$5.00/USD and the yellow tariff flag — but the oil assumption was never explicitly stated. If it was $80–90, the $114 reality makes the projections obsolete. (3) How extensively did the committee discuss the Middle East conflict as a reason to pause? The comunicado flagged it explicitly — the ata will reveal whether it was a passing mention or a sustained debate. Terminal Selic estimates continue to shift higher: XP at 13.50%, BTG/ASA now moving toward 14.00% given the ceasefire collapse.

Economic Calendar TUESDAY, MAY 5

Latin America Markets MONDAY CLOSE

The ceasefire collapse hit every LatAm index on Monday. Chile’s IPSA led losses at −1.75% as copper sold off on the broader risk-off move. Argentina’s MERVAL dropped 2.32% — the sharpest single-day decline since late March — as the Milei reform premium finally bowed to regional contagion. Mexico’s IPC fell 0.85% with RSI now below 50, confirming the bearish regime. Colombia’s COLCAP eased 0.39%, with RSI at 46.10 continuing its slow descent. The Ibovespa’s −0.92% was actually the region’s best relative performance — the BRL carry trade and Petrobras’s oil-price sensitivity provided partial insulation. The regional breadth is unambiguously bearish: five of five indices down, with the average decline at −1.25%. As covered in the latest LATAM Pulse, the ceasefire’s collapse means every LatAm central bank must now recalibrate its inflation path — the oil shock is no longer temporary.

Commodities & FX KEY MOVES

Oil reversed course violently on Monday as the ceasefire collapsed. Brent surged 5.8% to $114.44 — erasing the entire Friday pullback from $108.17 in a single session. WTI rose 4.4% to $106.42. The catalyst was Iran’s coordinated attack on the UAE: missiles at Fujairah oil hub (fire confirmed), drone strike on an ADNOC-affiliated tanker, and warning shots at US Navy vessels. The US launched Project Freedom — the first named naval operation of the war — with destroyers and 100+ aircraft. Two US-flagged ships successfully transited Hormuz. Goldman raised its Q4 Brent forecast from $80 to $90, implicitly killing the Hormuz-normalization-by-June thesis. For Brazil, $114 Brent is $34 above the BCB’s ~$80 reference scenario. Every day above $110 adds approximately 3-5bp to the expected IPCA pass-through.

USD/BRL edged to R$4.9644 — a marginal weakening of just R$0.0068 on a day the Ibovespa fell 0.92% and Brent surged 5.8%. O:4.9644, H:4.9644, L:4.9644, C:4.9644. RSI at 38.51 (signal: 35.22) — both rising from deeply oversold territory, but still below 40. The BRL has now held below R$5.00 for over four weeks including through the $126 oil spike, the Kijun break, the ceasefire collapse, and now the UAE attacks. The carry trade’s structural integrity is beyond question. The question is whether R$4.97 can hold if Brent retests $120+ this week.

Bitcoin pushed above $80,000 on Monday — O:79,855, H:81,325, L:79,810, C:80,834 (+1.24%). RSI at 67.56 (signal: 61.70) — the highest RSI reading since late January. BTC is decoupled from traditional risk assets, rising on a day equities fell and oil surged. The $80K close is a technical breakout from the three-week $72K–$78K range. Gold fell to $4,580 (−1.40%) as the ceasefire collapse pushed rate-hike expectations higher (ECB and BoE hikes now more certain), overwhelming the war premium. The 10-year yield rose 6bp to 4.438%.

Risk Map BULL vs BEAR

Positioning BOTTOM LINE

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