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
Iran Strikes the UAE, Ceasefire Collapses, and the Copom Ata Lands Into a War That Just Escalated
Today’s Brazil morning call covers the most significant military escalation since the war’s opening days — and the Copom minutes that must now be read through an entirely different oil lens. This is part of The Rio Times’ daily Brazil Financial Morning Call, covering Latin American financial markets.
The April 8 ceasefire is effectively dead. On Monday, Iran launched 12 ballistic missiles, 3 cruise missiles, and 4 drones at the United Arab Emirates — the first strikes on a US ally since the ceasefire began. Three people were injured. A fire broke out at Fujairah oil hub, one of the region’s largest storage facilities. A tanker was struck by drones near the Strait. Iran fired warning shots at US Navy vessels and claimed to have hit a US frigate near Jask — CENTCOM denied any ship was struck. The US launched “Project Freedom,” a naval operation with guided-missile destroyers and 100+ aircraft to restore transit through Hormuz. Two US-flagged ships successfully transited. Former Israeli PM Bennett called the UAE attacks “a declaration of the renewal of Iran’s war.” Brent surged 5.8% to $114.44, WTI rose 4.4% to $106.42. The S&P 500 fell 0.41% to 7,200.75, the Dow dropped 557 points.
The Ibovespa gave back most of Thursday’s rebound, falling 0.92% to 185,600.12 — slipping back below the Kijun at 187,197. The index opened at 187,318 (exactly Thursday’s close), hit an intraday high of 187,666 within the first hour, then sold off steadily as the UAE missile headlines broke during the session. The close at 185,600 puts the index 1,597 points below the Kijun — uncomfortably close to the 184,504 panic low from April 29. The BRL weakened marginally to R$4.9644 but remained below R$5.00 — the carry trade’s structural floor held even as missiles flew. Energy was the only positive S&P sector (+0.95%). Materials (−1.62%) and Industrials (−1.02%) led losses. Palantir rose 1.4% on record Q1 revenue. Today: Copom Ata at 12:00 BRT. ISM Services PMI (15:00 ET, cons: 53.7). ISM Services Prices (prev: 70.7). JOLTS (15:00, cons: 6.86M). US Trade Balance (13:30, cons: −$61B). ECB Lagarde speaks (13:30). FOMC Bowman speaks (15:00). IPC-Fipe (10:00 BRT). Itaú Q1 + Bradesco Q1 earnings. Warsh takes Fed chair May 15 (10 days). War Day 66.
Three Things That Matter
| Yesterday | Iran launched 12 ballistic missiles, 3 cruise missiles, 4 drones at UAE — first strikes since ceasefire. Fire at Fujairah oil hub. Tanker struck by drones near Hormuz. Iran claimed hit on US frigate — CENTCOM denied. US launched “Project Freedom” — naval operation to reopen Hormuz, 2 US-flagged ships transited. Ibovespa −0.92% to 185,600. O:187,318, H:187,666, L:185,538, C:185,600. Slipped below Kijun. S&P 500 −0.41% to 7,200.75. Dow −557 to 48,942. Nasdaq −0.19% to 25,068. Brent +5.8% to $114.44. WTI +4.4% to $106.42. Energy only positive S&P sector (+0.95%). Gold −1.4% to $4,580. 10Y +6bp to 4.438%. USD/BRL R$4.9644. Palantir +1.4% (record Q1). Focus IPCA 2026 rose to 5.0% (8th consecutive increase — breached psychological threshold) |
| Overnight | RBA held 4.35% (in-line). Australia PMI improved to 50.4 (from 46.6). Japan + China + South Korea closed (holidays). Brent steady near $114 overnight — no further escalation since Monday’s strikes. Israel, Bahrain on high alert. Former PM Bennett: “declaration of renewal of Iran’s war.” Pinterest beat earnings (+18% YoY revenue). Norwegian Cruise cut full-year outlook (ME disruptions). S&P 500 futures +0.01%. Goldman raised Brent Q4 forecast from $80 to $90. European PMIs Monday: Eurozone Mfg 52.7 (beat 52.2 cons), Germany 51.5 (beat), France 52.3 (miss) |
| Today | BCB COPOM ATA (MINUTES) at 12:00 BRT — key questions: dissent? oil assumptions? June guidance? IPC-Fipe Inflation Apr (10:00 BRT, prev: 0.59%). Itaú Q1 + Bradesco Q1 earnings. Spanish Unemployment (cons: −18.6K). ECOFIN meetings. US Trade Balance Mar (13:30 ET, cons: −$61B). ECB President Lagarde Speaks (13:30 ET). ECB de Guindos speaks. US Services PMI Apr (14:45, cons: 51.3). ISM Non-Manufacturing PMI Apr (15:00, cons: 53.7 vs prev 54.0). ISM Services Prices (prev: 70.7). JOLTS Job Openings Mar (15:00, cons: 6.86M). New Home Sales. FOMC Bowman speaks (15:00). Fed Vice Chair Barr speaks (17:30). BoE Woods speaks (17:30). API Crude (21:30). Warsh takes Fed chair May 15 (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
| Indicator | Close / Level | Change |
|---|---|---|
| Ibovespa | 185,600.12 | −0.92% (below Kijun again) |
| USD/BRL | R$4.9644 | +0.02% (sub-R$5.00 holds) |
| S&P 500 | 7,200.75 | −0.41% (UAE escalation) |
| Nasdaq | 25,067.80 | −0.19% |
| Dow Jones | 48,941.90 | −1.13% (−557 pts) |
| Brent Crude | $114.44 | +5.8% (ceasefire collapse) |
| WTI Crude | $106.42 | +4.4% |
| Gold | $4,580 | −1.40% |
| Bitcoin | $80,834 | +1.24% (above $80K) |
| US 10Y Yield | 4.438% | +6bp |
| Focus IPCA 2026 | 5.0% | 8TH CONSECUTIVE RISE |
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
| Time | Event | Impact |
|---|---|---|
| All Day | HOLIDAYS: Japan, South Korea, China closed. US + Europe + LatAm open | NOTE |
| 05:30 ET | RBA Rate Decision: held 4.35% (in-line). RBA Monetary Policy Statement | LOW |
| 10:00 BRT | IPC-Fipe Inflation Apr (prev: 0.59%) | MEDIUM |
| 12:00 BRT | BCB COPOM ATA (MINUTES) — dissent? oil assumptions? June guidance? Written Apr 29, published into ceasefire collapse | CRITICAL |
| Pre-US | Itaú Q1 earnings. Bradesco Q1 earnings. Spanish unemployment (cons: −18.6K). UK car registrations. ECOFIN meetings | HIGH |
| 13:30 ET | US Trade Balance Mar (cons: −$61B vs prev −$57.3B). Canada Trade Balance. ECB President Lagarde Speaks. ECB de Guindos speaks | HIGH |
| 14:45–15:00 ET | S&P Global Services PMI (14:45, cons: 51.3). ISM Non-Manufacturing PMI Apr (15:00, cons: 53.7 vs prev 54.0). ISM Services Prices (prev: 70.7). ISM Services Employment (prev: 45.2). JOLTS Job Openings Mar (15:00, cons: 6.86M). New Home Sales. FOMC Gov Bowman Speaks (15:00) | CRITICAL |
| 17:30 ET | Fed Vice Chair Barr speaks. BoE Deputy Gov Woods speaks | MEDIUM |
| 21:30 ET | API Weekly Crude Oil Stock (prev: −1.79M) | MEDIUM |
Latin America Markets MONDAY CLOSE
| Index | Close | Change | RSI (14) | Signal |
|---|---|---|---|---|
| Ibovespa (Brazil) | 185,600.12 | −0.92% | 56.65 | Below Kijun |
| IPC (Mexico) | 67,283.60 | −0.85% | 49.87 | Bearish |
| COLCAP (Colombia) | 2,169.52 | −0.39% | 46.10 | Bearish |
| IPSA (Chile) | 10,717.34 | −1.75% | 57.03 | Breakdown |
| MERVAL (Argentina) | 2,767,137 | −2.32% | 49.52 | Bearish |
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
| Bull Case | Bear Case |
|---|---|
| The BRL below R$5.00 through the ceasefire collapse is the ultimate structural validation. Missiles at the UAE, $114 Brent, Focus at 5.0%, Ibovespa below Kijun — and the dollar didn’t break R$4.97. The 14.50% Selic carry trade is proven in the worst-case scenario. If inflows hold, the equity selloff has a floor.
Itaú and Bradesco earnings could provide a domestic offset. Both banks benefit from 14.50% Selic through net interest income expansion. If asset quality remains stable and guidance is constructive, the two heaviest Ibovespa weights provide a mechanical floor for the index. Bank earnings have beaten in every quarter of the war. Project Freedom changes the Hormuz equation. The US is now committed to a named naval operation with 100+ aircraft and destroyers. Two ships have already transited. If the US can establish a sustained corridor through Hormuz, the oil premium deflates even if the ceasefire remains dead. This is a structural shift from blockade to contested-but-open waterway. |
The ceasefire is dead and the war has escalated to a new phase. Iran attacking the UAE — a US ally — crosses a line that the April 8 ceasefire was designed to prevent. Fujairah oil hub was hit. A tanker was struck. The US is now in a shooting war with Iran in Hormuz (6 boats destroyed). Former PM Bennett called it “a declaration of renewal.” There is no diplomatic off-ramp visible.
Focus IPCA at 5.0% closes the Copom’s door. Eight consecutive weekly increases. The gap to the 3.0% target is 200bp. The BCB is cutting while projecting above-ceiling inflation. If the ata today reveals any discussion of pausing, the June cut probability collapses and the DI curve reprices 30-50bp higher across the front end. The cutting cycle may be over. The Ibovespa is 1,096 points from the panic low with the war escalating. Monday’s close at 185,600 is 1,096 points above the 184,504 April 29 low. The Kijun at 187,197 is now overhead resistance for the second time. If Brent retests $120+ on further escalation, the 184,504 level breaks and the next support is 183,263 — opening a 2,300-point gap to the cloud base. The correction deepens. |
Positioning BOTTOM LINE
The war has escalated. The ceasefire that held from April 8 to May 4 is functionally dead after Iran attacked the UAE with missiles and drones, hitting Fujairah oil hub and striking a tanker near Hormuz. The US has launched Project Freedom — its first named naval operation — and is actively shooting at Iranian assets in the strait. Brent reversed from $108 to $114 in a single session. The Ibovespa slipped back below the Kijun at 187,197, closing at 185,600 — 1,096 points from the April 29 panic low. Focus IPCA breached 5.0% for the first time. Five of five LatAm indices fell. The global rate cycle continues its hawkish shift: ECB and BoE hikes now more certain, Warsh takes the Fed chair in 10 days.
The Copom ata at 12:00 BRT arrives into this transformed environment. The minutes were written when the ceasefire was intact — they will be read when it’s dead. The key variable is whether the ata reveals any discussion of pausing. If it does, June is a hold and the DI curve reprices immediately. If it shows unanimous data-dependent easing, the market will ask whether that consensus can survive the ceasefire collapse, $114 Brent, and Focus at 5.0%. The Itaú and Bradesco earnings provide the only potential domestic offset — strong bank results would put a mechanical floor under the index.
Bias: Bearish. The war has entered a new phase and the Copom’s room is shrinking. The 184,504 panic low is 1,096 points below the close and is the level to watch. If Brent holds below $115 and the ata is data-dependent-dovish, the Ibovespa stabilizes in the 185K–186K range. If Brent retests $120+ on further escalation or the ata reveals a pause discussion, 184K breaks and 183K comes into play. The BRL below R$5.00 remains the structural anchor — but even anchors have limits. Watch Brent, watch the ata, watch the banks..