Carnival Edition · Day 2
This is part of The Rio Times’ daily Brazil Financial Morning Call, covering Latin American financial markets.
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Today’s Focus
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The Big Picture: Wall Street reopens today after the Presidents’ Day holiday into a shortened but data-dense week — and it returns on the back foot. S&P 500 futures are trading at ~6,820, down roughly 0.4% from Friday’s close of 6,836, while Nasdaq 100 futures are off ~0.8%, extending what is now the tech-heavy index’s fifth consecutive weekly decline and its longest losing streak since 2022. The “AI disruption vigilantes,” as Morgan Stanley’s Daniel Skelly put it, found new targets last week — trucking, real estate, financial services — broadening the sell-off beyond the original Magnificent Seven names. Brazil remains dark for Carnival (B3 reopens Wednesday at 1PM BRT), as do Argentina, Venezuela, and Ecuador. China is still shuttered for Lunar New Year. European markets are the main arena today, with the DAX, FTSE, and CAC all set to open cautiously lower.
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The Ibovespa enters the second day of its break at 186,464 — up 15.73% YTD — with every structural tailwind intact but two days of global price action still to absorb before the Wednesday reopening. The key question for today: does the U.S. market stabilize on the reopen, or does the AI disruption narrative deepen? The answer shapes everything for Brazil’s Ash Wednesday session.
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Where We Left Off
\nFriday, February 13 closing levels — pre-Carnival snapshot + Tuesday morning indications
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| Indicator | Level | Fri Chg | Weekly Chg | YTD |
|---|---|---|---|---|
| Ibovespa | 186,464 | −0.69% | +1.92% | +15.73% |
| USD/BRL | 5.22 | +0.57% | +0.21% | −4.71% (BRL str.) |
| S&P 500 | 6,836 | +0.05% | −1.39% | −1.3% |
| Nasdaq | 22,547 | −0.22% | −2.10% | −2.2% |
| U.S. 10Y Treasury | 4.04% | −7bps | −11bps | lowest since Dec |
| Gold (spot) | ~$5,003 | +1.6% | ~flat (whipsaw) | +6% YTD |
| Brent Crude | $67.75 | +0.3% | −2.35% | below 2025 avg |
| Iron Ore (62% Fe) | ~$102/t | flat | flat (China LNY) | rangebound |
| DXY | 96.93 | ~flat | −0.02% | weakening trend |
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What to Watch Today
\nTuesday, February 17 — U.S. reopens, Carnival continues in LatAm
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The big picture: The U.S. market reopens today after Monday’s Presidents’ Day holiday into a shortened four-day week. Brazil (Carnival), Argentina, Venezuela, and Ecuador remain closed. China stays dark for Lunar New Year. This is the critical session that determines how much gap risk the Ibovespa absorbs on Wednesday’s reopening.
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NY Empire State Manufacturing Index (8:30 AM ET). February reading; consensus at 8.50, prior 7.70. This is the first U.S. hard data point for the week. A weak print reinforces the soft-landing narrative and supports rate-cut expectations; a strong beat could trigger a brief bond sell-off.
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German ZEW Economic Sentiment (5:00 AM ET). February survey expected at 65.2 vs 59.6 prior. The ZEW has been a lead indicator of Eurozone recovery momentum. A beat would further support European equities, which are already outperforming the U.S. in 2026 — the DAX is up ~16% YTD.
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German CPI Confirmation (2:00 AM ET). January final reading expected unchanged at 2.1% YoY. Any surprise matters for ECB rate path calculations, which in turn affect global capital flows to EM.
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U.K. Labor Market Data (2:00 AM ET). December unemployment expected at 5.1%; average earnings at 4.6% YoY. The Bank of England is navigating between sticky wage inflation and cooling activity — any shift in the balance matters for GBP and global rate expectations.
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NAHB Housing Market Index (10:00 AM ET). February reading; consensus 38 vs 37 prior. Homebuilder sentiment is a proxy for U.S. consumer confidence and rate sensitivity.
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Fed speakers. Vice Chair for Supervision Barr (12:45 PM ET) and FOMC Member Daly (2:30 PM ET) both speak today. Watch for any signals on rate-cut timing ahead of Thursday’s FOMC Minutes. Daly has historically leaned dovish — any shift would be significant.
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RBNZ Interest Rate Decision (overnight, 8:00 PM ET). New Zealand’s central bank is expected to hold at 2.25%. The decision and statement will be parsed for signals on global central bank easing momentum.
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The Ibovespa Setup
\nGap risk is building — today’s U.S. session is decisive
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B3 resumes Wednesday with an abbreviated Ash Wednesday session (1PM–5:55PM BRT). Traders will compress two full days of global price action — today’s U.S. session plus Wednesday morning futures — into a four-hour window with structurally lower liquidity. This creates amplified moves in both directions.
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The early read is cautious but not alarming. S&P 500 futures at ~6,820 represent only a 0.4% dip from Friday’s close — modest given the two-day gap. The Nasdaq’s deeper decline (~0.8%) reflects concentrated AI disruption selling rather than broad risk-off. The 10-year Treasury is steady around 4.06%, barely changed from Friday’s 4.04%. The USD/BRL in offshore markets is stable near 5.22. Gold’s pullback to ~$4,912 from Friday’s $5,003 signals some safe-haven unwinding but nothing dramatic.
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What would change the picture: If the S&P 500 sells off more than 1% today, or if the Nasdaq drops 2%+, the Wednesday reopening becomes a genuine risk event. Conversely, if U.S. markets stabilize and the Empire State data comes in benign, the Ibovespa has a clear path to test the 187,000+ zone on the reopening. The key overnight data — RBNZ decision, Japanese trade balance, Australian wages — will add color but are unlikely to move Brazilian equities materially.
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Key Levels
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Support: 183,662 (Friday’s intraday low) → 182,000 (BB Investimentos technical support) → 180,789 (Bollinger mid-band). Resistance: 187,766 (Thursday’s close) → 190,561 (all-time intraday high, Feb 11) → 194,000 (Safra Invest projection). The bull trend is intact above 182,000. A close below that level on the Wednesday reopening would signal a deeper correction toward 178,000–180,000.
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Road to March Copom
\n29 days to Brazil’s first rate cut in over a year
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The March 17–18 Copom meeting remains the single most important domestic catalyst. The BCB Focus survey has shown the 2026 IPCA forecast declining for six consecutive weeks to ~3.97%, well within the 4.50% ceiling. The year-end Selic consensus sits at 12.25%, implying ~275bps of cuts from the current 15%. XP’s economics team anticipates the easing cycle begins in March with 50bp moves, targeting a terminal rate of 12.00%.
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Monday’s Focus survey — released during Carnival — should have confirmed or adjusted these expectations. No BCB Focus was published today due to the holiday (the survey was released yesterday, Feb 16). The February 3 edition showed IPCA 2026 at 3.99%, the first reading below 4%. The trend is unmistakably dovish. Between now and March 17, the key remaining inputs are: this week’s FOMC Minutes and PCE (which shape the Fed rate-cut path and the Selic-Fed spread), the February IPCA-15 preview (due early March), and any fiscal noise from Brasília.
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Verdict
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The March cut is locked in. The market debate has shifted from if to how much: 25bp (the cautious “Galípolo consensus” protecting credibility) vs 50bp (XP’s base case, signaling urgency about the growth slowdown). The Ibovespa has priced in the start of easing; what moves the needle now is the pace, the terminal rate, and whether this week’s U.S. data cooperates by keeping the Treasury rally intact.
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Economic Calendar
\nTuesday, February 17, 2026
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| Time (ET) | Event | Impact |
|---|---|---|
| All Day | Brazil — Carnival (B3 closed, returns Wed 1PM BRT) | HOLIDAY |
| All Day | Argentina / Venezuela / Ecuador — Carnival | HOLIDAY |
| All Day | China — Chinese New Year / South Korea — Korean New Year | HOLIDAY |
| 02:00 | U.K. Unemployment Rate (Dec) — Cons: 5.1% / Prev: 5.1% \nAverage Earnings +Bonus: Cons 4.6% / Prev 4.7%. Claimant Count: Cons 22.8K. |
MEDIUM |
| 02:00 | German CPI Final (Jan) — YoY Cons: 2.1% / MoM Cons: 0.1% \nHICP: YoY Cons 2.1% / MoM Cons −0.1%. Confirmation of preliminary reading. |
MEDIUM |
| 05:00 | German ZEW Economic Sentiment (Feb) — Cons: 65.2 / Prev: 59.6 \nEurozone ZEW: Cons 45.2 / Prev 40.8. Key European confidence gauge. |
HIGH |
| 08:30 | NY Empire State Manufacturing Index (Feb) — Cons: 8.50 / Prev: 7.70 \nFirst U.S. hard data point of the week. Sets tone for manufacturing narrative. |
HIGH |
| 08:30 | Canada CPI (Jan) — YoY Cons: 2.4% / MoM Cons: 0.1% / Trimmed: Cons 2.6% | MEDIUM |
| 10:00 | NAHB Housing Market Index (Feb) — Cons: 38 / Prev: 37 \nHomebuilder sentiment — proxy for rate sensitivity in the economy. |
MEDIUM |
| 11:30 | U.S. 3-Month & 6-Month Bill Auctions — Prev: 3.60% / 3.50% | LOW |
| 12:45 | Fed Vice Chair Barr Speaks | HIGH |
| 14:30 | FOMC Member Daly Speaks \nDovish lean — watch for any signals ahead of Thursday’s FOMC Minutes. |
HIGH |
| 20:00 | RBNZ Interest Rate Decision — Cons: 2.25% / Prev: 2.25% | MEDIUM |
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Calendar Takeaway
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Today is the first real test of global risk appetite since Friday. The NY Empire State (8:30 AM) and NAHB (10:00 AM) will anchor the U.S. growth narrative, while the German ZEW (5:00 AM) confirms whether Europe’s outperformance is sustainable. Two Fed speakers — Barr and Daly — will be parsed for any pre-Minutes signals. The overnight RBNZ decision will add a data point on global easing momentum. Mexico and Colombia remain the only major LatAm markets open and will serve as real-time sentiment proxies for the Ibovespa reopening.
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LatAm Markets Snapshot
\nFriday, February 13 closes — the proxies to watch today
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| Index | Close | Fri Chg | Status |
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| Ibovespa | 186,464 | −0.69% | CLOSED (Carnival) |
| S&P/BMV IPC (Mexico) | 71,479 | +0.83% | OPEN today |
| MSCI COLCAP (Colombia) | 2,369 | +1.73% | OPEN today |
| S&P IPSA (Chile) | 10,898 | −0.70% | OPEN today |
| S&P Merval (Argentina) | 2,816,128 | −1.25% | CLOSED (Carnival) |
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Key watchpoint: Mexico’s IPC and Colombia’s COLCAP are the only major LatAm markets open today alongside Chile’s IPSA. Both Mexico (+0.83% Friday) and Colombia (+1.73% Friday) are trading at multi-month highs. Their performance today — particularly in the afternoon after U.S. data and Fed speakers — will be the single best proxy for how the Ibovespa reopening will shape up. If Mexico and Colombia hold their gains or advance further, it signals continued EM appetite. If they sell off alongside U.S. tech, expect the Ibovespa to gap lower on Wednesday. Note: Colombia’s Q4 GDP printed significantly below expectations yesterday (2.3% vs 3.1% consensus), which could weigh on COLCAP today.
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Commodities Outlook
\nWhat’s moving the Ibovespa’s heaviest weights
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Oil: Brent is slipping to ~$67.40, extending last week’s decline as U.S.–Iran diplomatic progress continues to ease supply-risk premia. President Trump described the talks as “very good” and Tehran called them a “step forward.” The IEA’s warning of a nearly 4M b/d surplus in 2026 caps the upside. For Petrobras, this is manageable — the company’s breakeven is well below current levels — but the trend is headwind, not tailwind.
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Iron Ore: Flat at ~$102/t with China on holiday through this week. The post-Lunar New Year restocking season historically provides a seasonal lift in late February/March. Port inventories above 160M tons cap the upside, but any signal of Chinese stimulus when markets reopen would be a catalyst for Vale and CSN.
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Gold: Sharp pullback to ~$4,912 in early Tuesday trading, down roughly 1.8% from Friday’s $5,003 close. The dip reflects a firming dollar (DXY up to ~97.09) and profit-taking after the whipsaw last week. The structural bull case remains intact — central bank buying, geopolitical hedging — but the deleveraging episodes signal stretched positioning. Gold above $4,900 is supportive; a sustained break below opens $4,750.
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Bottom Line
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Today is the day that shapes the Ibovespa’s Wednesday reopening. The early read from U.S. futures is cautious but not panic-inducing — S&P 500 down 0.4%, Nasdaq off 0.8%, Treasuries steady. The gap risk that worried traders heading into the break has not materialized into a worst-case scenario. If the U.S. session stabilizes today and the Empire State and NAHB data don’t shock, the Ibovespa has a reasonable path to reopen near Friday’s levels or slightly higher.
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The structural story is unchanged and remains the strongest EM equity narrative of 2026: a confirmed rate-cut cycle ahead, record foreign inflows driven by the global rotation out of U.S. tech, a weakening dollar (DXY down ~8.9% YoY), cooling inflation on both sides of the equator, and an Ibovespa up 15.73% YTD that briefly touched 190,000 for the first time ever.
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But the back half of this week is loaded with land mines. The FOMC Minutes (Thursday), Q4 GDP and PCE (Friday), and Walmart earnings (Thursday) collectively represent the most consequential 72 hours for global macro since the year began. The transition to Fed Chair Warsh adds a layer of policy uncertainty. And Brazil will absorb all of this on reduced post-Carnival liquidity.
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© 2026 RT Staff Reporters | Brazil Financial Morning Call
Related coverage: Ibovespa session | dollar-real exchange rate