Brazil’s Financial Morning Call for Tuesday, May 19, 2026

S&P −0.07% · Ibovespa New Intraday Low 175,811 · BRL R$4.99 · Brent $107.71 · 10Y Yield 4.63% · Trump Called Off Iran Attack · IBC-Br Mar −0.7% · Warsh Sworn In This Week · Nvidia Earnings Wed · War Day 80

The Trump-Iran Pivot Took Some Oil Risk Off — but the 10Y at 4.6% and Warsh’s Arrival Replaced It With Rate Risk

Monday’s tape captured a textbook substitution of risks rather than a cleansing of them. The oil bid that defined the previous week collapsed when Trump posted that the leaders of Qatar, Saudi Arabia, and the UAE had told him “serious negotiations are underway with Iran that will result in a deal acceptable to the U.S.,” per CNBC — and that he had instructed the Pentagon to stand down from a Tuesday strike. Brent fell from $111+ intraday to settle at $107.71, then continued lower in extended trading toward $102 on reports that the US had floated a temporary sanctions waiver, per Trading Economics. The de-escalation flowed directly to the BRL, which broke back below R$5.00 to close at R$4.9901 for the first time since late April, per ICE — the war-premium FX trade unwinding faster than the equity panic.

But the 10-year Treasury yield climbed above 4.6% to its highest level since February 2025, per TheStreet, and the 30-year held around 5.13%, the highest since 2007. Morgan Stanley’s Michael Wilson flagged the 4.5% level as the point at which yields become “a noticeable headwind for equity multiples,” per Yahoo Finance, and the Nasdaq’s 0.51% loss against an essentially flat S&P (−0.07%) and a positive Dow (+0.32%) shows the rotation underway. Kevin Warsh will be sworn in as Fed chair this week, and Ed Yardeni warned clients Sunday that “the bond market fears that he will tolerate inflation rather than hike the federal funds rate,” per Yahoo Finance. The same rate-driven pressure that compressed the Selic-Fed differential when Fed cuts were priced out for 2026 now compounds with a yield curve repricing the long end higher. For the Ibovespa, the substitution is unhelpful: less war premium in oil-linked names, more discount-rate pressure on the rate-sensitive complex (utilities, retail, real estate) that has carried the index since late April.

Market Snapshot AS OF MON, MAY 18 CLOSE

Ibovespa Printed a New Intraday Low at 175,811 — Three Weeks Into the Correction, MACD Histogram Hit −3,057

Monday: O:177,280.72, H:177,329.88, L:175,811.33, C:176,975.82 (−0.17%, −308.01), per B3 chart data. Open ≈ High again — the fourth time in the correction. The intraday low at 175,811 is a fresh cycle low (below Friday’s 175,417), now marking an 11.5% decline from the 198,658 ATH. MACD: −1,319.71/−1,736.94/−3,056.66 — the histogram at −3,057 is a new cycle extreme and 228 points wider than Friday’s. The momentum decay continues to accelerate. RSI at 38.95, signal at 32.29 — the signal at 32.29 is now firmly inside oversold territory below 35 for the first time in the correction. Past three weeks have produced three intraday lows in three different sessions without a confirmed reversal candle.

Resistance: 176,976 (Mon close) → 177,284 (Fri close) → 180,777 → 182,046 → 185,809 (Kijun, fallen sharply).

Support: 175,811 (Mon intraday low) → 174,186 (next chart level) → 163,396 (200-day SMA).

Copom Watch SELIC 14.50% · NEXT: JUNE 17-18 (29 DAYS)

The IBC-Br shock changes the Copom math. A −0.7% March print versus −0.2% consensus is the first concrete evidence that restrictive monetary policy is biting domestic activity — Suno Research’s Rafael Perez told Reuters the read reflects “ongoing effects of restrictive monetary policy on economic activity.” Services down 0.8% is the variable the Copom watches most carefully for de-anchoring of inflation expectations versus demand cooling, and an 0.8% services contraction in a single month is unambiguously demand-cooling. Combined with Brent’s retreat to $107 and the BRL back below R$5.00, the Copom now has three constructive inputs versus the May 5 ata’s “net dovish” framing: cooling activity, easing oil pressure, stronger currency. The hawkish inputs — Fed cuts priced out for 2026, 10Y yield at 4.6%, Focus IPCA at 5.02% (10th rise next week the test) — remain in place, but the dilemma has eased materially. Genial’s 13.25% terminal stays the outlier; consensus is shifting back toward 13.50-13.75% if today’s Trump-Iran pivot holds and Wednesday’s Nvidia print doesn’t reignite tech volatility.

Economic Calendar TUESDAY, MAY 19

Latin America Markets MONDAY CLOSE

Monday split LatAm decisively for the first time in two weeks. Argentina’s MERVAL surged 4.00% to 2,816,245 — its largest single-session gain since early April — pulling the index back above its Kijun and reclaiming the long-term uptrend line that had been threatened by the May correction. Mexico’s IPC added 0.63% to 68,405 with the MACD histogram pushing positive (135.32 signal vs. 209.52 line). Chile’s IPSA rose 0.45% to 10,468 on a constructive engulfing pattern. Brazil and Colombia were the laggards: the Ibovespa printed a new intraday low at 175,811 even though it closed flat, and COLCAP fell another 0.98% to 2,101 with RSI signal at 35.05 — now firmly oversold. The split tracks the Iran de-escalation logic: oil-importing economies (Chile, Argentina, Mexico) benefit from Brent’s retreat; the Ibovespa’s heavy commodity weight (Petrobras, Vale) loses the war premium without picking up the rate-cut bid.

Positioning BOTTOM LINE

Frequently Asked Questions

Why did Brent oil fall on Monday May 18?

Brent crude fell 1.42% to $107.71 on Monday and continued lower in extended trading after President Trump confirmed he had called off a planned U.S. military strike on Iran that was scheduled for Tuesday, per CNBC and Trading Economics. Trump posted that the leaders of Qatar, Saudi Arabia, and the UAE told him “serious negotiations are underway with Iran that will result in a deal acceptable to the U.S.” However, a senior U.S. official told Axios that Iran’s latest counter-proposal is “not a meaningful improvement,” meaning a deal remains uncertain and oil could rebound quickly.

What did Brazil’s IBC-Br for March show?

Brazil’s IBC-Br economic activity index fell 0.7% in March on a seasonally adjusted basis — sharply below the −0.2% Reuters poll consensus, per Reuters citing BCB data. All sectors declined, with services (the main driver of Brazil’s economy) falling 0.8% from February. The Q1 reading still grew 1.3% from the previous quarter on strong January-February momentum, and the index rose 3.1% from a year earlier on a non-seasonally adjusted basis. Suno Research’s Rafael Perez told Reuters the print reflects “ongoing effects of restrictive monetary policy on economic activity.”

Why did the 10-year Treasury yield rise to a 52-week high?

The 10-year Treasury yield climbed above 4.6% on Monday, the highest level since February 2025, per TheStreet. Ed Yardeni told clients that “the bond market fears that he [incoming Fed chair Kevin Warsh] will tolerate inflation rather than hike the federal funds rate,” per Yahoo Finance. Warsh is scheduled to be sworn in this week as Powell’s successor. Morgan Stanley‘s Michael Wilson flagged 4.5% as the level at which yields become “a noticeable headwind for equity multiples,” helping explain why tech stocks led Monday’s losses with Nasdaq down 0.51% versus Dow up 0.32%.

When does Nvidia report and why does it matter for Brazil?

Nvidia reports Q1 FY2027 earnings on Wednesday, May 20, after the U.S. market close. The print is the most anticipated corporate event of May because Nvidia‘s market cap reached a record $5.7 trillion on May 14 before pulling back, and the AI trade has been the primary driver of the S&P 500’s record highs above 7,500. For Brazil, the relevance is indirect but powerful: a strong Nvidia print would likely reignite global tech risk appetite and help offset the 10-year yield above 4.6%, supporting EM equity flows. A miss would confirm the tech profit-taking thesis and add pressure to the Ibovespa already at three-week lows.