Super Wednesday
Today’s Brazil’s Financial Morning Call is built around the most consequential double-header in months: the FOMC at 14:00 ET and the Copom after the close. This is part of The Rio Times’ daily Brazil Financial Morning Call, covering Latin American financial markets.
The Ibovespa closed Tuesday at 180,409.73 (+0.30%), stabilizing after Monday’s 1.25% recovery, while the dollar fell to R$5.20 (−0.57%) as risk appetite improved. But the session’s mood darkened late after Iran launched a new wave of strikes on the UAE — hitting Dubai’s international airport, the Fujairah oil port, and the Shah gas field — and Israel reported “large-scale” attacks on Tehran.
The escalation reversed Monday’s de-escalation narrative. Brent settled at $103.42 (+3.20%), clawing back Monday’s 2.8% decline.
Yet the strategic picture is more nuanced: Treasury Secretary Bessent confirmed the US is allowing Iranian oil tankers through Hormuz, a direct US-Iran communications channel has reportedly been activated, and White House economic adviser Kevin Hassett said the conflict will “end soon” — projecting a 4-to-6-week timeline with Washington “ahead of schedule.” Several tankers navigated the Strait safely over the weekend.
The BCB Focus Survey delivered on Monday: the Selic end-2026 median rose from 12.13% to 12.25%, confirming the market is pricing a shallower easing cycle. DI rates closed higher Tuesday on speculation about a possible trucker strike.
The Copom’s first day of deliberations is behind us. The consensus has now consolidated around a 25 bps cut to 14.75%, abandoning the 50 bps camp that dominated until last week. The FOMC is expected to hold at 3.50–3.75%, but the updated dot plot and Powell’s press conference will signal how the Iran oil shock is reshaping the rate path. US PPI data at 08:30 ET provides the final inflation input before the decision.
Three Things That Matter
| Monday | Ibovespa +1.25% to 179,875 — best day since war began. Oil fell sharply (Brent −2.8% to $100.21) as several tankers navigated Hormuz safely. USD/BRL fell to R$5.23 (−1.6%). Bessent confirmed US allowing Iranian tankers through. Hassett: war will “end soon,” 4-6 weeks. Focus Survey: Selic end-2026 rose to 12.25% (from 12.13%). S&P 500 +1.0%, best session since Feb 28. DXY fell from ~100.5 to ~100.0 |
| Tuesday | Ibovespa +0.30% to 180,410 — rallied to 182,800 intraday then faded. USD/BRL R$5.20 (−0.57%). Brent +3.20% to $103.42 after Iran struck UAE (Dubai airport, Fujairah port, Shah gas field) and Israel hit Tehran. DIs rose on trucker strike speculation. Copom Day 1 underway. S&P 500 +0.25% to 6,716. Nasdaq +0.47%. Natura +8.5% post-earnings. Gold −1.15% to ~$4,994. US allies refused to escort ships through Hormuz |
| Today | SUPER WEDNESDAY: FOMC decision + dot plot (14:00 ET, cons: hold 3.50-3.75%). Powell press conference (14:30 ET). Copom decision (after close, cons: 25 bps cut to 14.75%). US PPI (08:30 ET, cons: +0.3% MoM). BoC rate decision (09:45 ET). Crude Oil Inventories (10:30 ET). Chile GDP Q4 (07:30). War Day 19. BoJ overnight |
Where We Left Off TUESDAY, MAR 17 — B3 CLOSE
The Ibovespa closed Tuesday at 180,409.73 (+0.30%), well off the session’s high of 182,800.30 reached in the morning when global risk appetite surged. The index opened near 179,882, rallied nearly 3,000 points before fading through the afternoon as Iran’s new wave of attacks reversed sentiment.
At its peak, the Ibovespa was briefly above the 50-day SMA at ~181,518 — the first time it touched that level since the Thursday–Friday selloff — but failed to hold it. Petrobras led the upside (+1.22% ORD, +1.76% PREF) on Brent’s 3.2% rise. Natura surged 8.46% on a strong Q4 earnings beat.
In New York, markets also faded from their highs. The S&P 500 gained 0.25% to 6,716.09, the Dow added 0.10% to 46,993.26, and the Nasdaq rose 0.47% to 22,479.53 — all paring gains from earlier in the session as the Iran-UAE strikes hit newswires. Treasury yields edged up, with the 10Y at ~4.24% (+4 bps). The dollar weakened for a second session, with DXY slipping toward ~99.50 as the safe-haven bid faded before the FOMC.
The geopolitical picture grew sharply more complex. Iran attacked the UAE for the third time in four days, striking Dubai’s airport, the Fujairah oil port (halting loadings), and the Shah gas field near Abu Dhabi. Israel launched “large-scale” strikes on Tehran. A tanker was hit by a projectile near Fujairah overnight.
Yet simultaneously, the diplomatic track accelerated: a direct US-Iran communications channel was activated, Bessent confirmed Iranian oil tankers are being allowed through Hormuz, and Hassett projected the conflict would end within 4-6 weeks. As covered in yesterday’s Morning Call, the market is caught between escalation and the first credible de-escalation signals.
Market Snapshot DATA AS OF TUE, MAR 17 CLOSE
| Indicator | Close | Change |
|---|---|---|
| Ibovespa | 180,410 | +0.30% |
| USD/BRL | R$5.20 | −0.57% |
| S&P 500 | 6,716 | +0.25% |
| Nasdaq | 22,480 | +0.47% |
| 10Y Treasury | 4.24% | +4 bps |
| Gold (Spot) | ~$4,994 | −1.15% |
| Brent Crude | $103.42 | +3.20% |
| Iron Ore (62%) | ~$102 | +1.0% |
| DXY | ~99.50 | −0.50% |
What to Watch WEDNESDAY CATALYSTS
This is the most event-dense day since the war began. The FOMC decision at 14:00 ET is the global anchor. The Fed will hold at 3.50–3.75% — the market prices 99%+ probability.
But the updated Summary of Economic Projections (dot plot) will be decisive. In December, the median dot projected two cuts in 2026. If the new dot plot shows one or zero cuts, it reprices the entire US rate curve and tightens global financial conditions further. Powell’s press conference at 14:30 ET will be parsed for any signal on how the Iran oil shock changes the inflation calculus.
The Copom decides after the B3 close. The consensus has converged on 25 bps to 14.75%, a compromise between honoring the January forward guidance (“initiate flexibilization”) and the dramatically altered macro backdrop: $103 Brent, the IPCA miss (+0.70%), the R$30 billion fiscal package, and the Focus Survey revision to Selic 12.25%.
The 50 bps camp has effectively dissolved. The key variable is the forward guidance language: does the Copom signal a data-dependent pace (leaving all options open for May) or commit to a gradual 25 bps cadence? The former is more likely given the uncertainty.
Before the main events, US PPI at 08:30 ET provides the final inflation input for the Fed. Consensus is +0.3% MoM and +2.9% YoY (prev: +0.5% / +2.9%). A hot PPI could shift the dot plot narrative.
The Bank of Canada also decides at 09:45 ET (cons: hold at 2.25%). Chile Q4 GDP at 07:30 is worth watching (cons: +1.7% YoY). EIA crude oil inventories at 10:30 ET matter more than usual given the Hormuz disruption (cons: −1.5M barrels). War Day 19 — the diplomatic track competes with Iran’s military escalation against UAE infrastructure.
Ibovespa Setup TECHNICAL LEVELS
The Ibovespa closed Tuesday at 180,409.73 (+0.30%). Daily RSI reads 46.60 (MA: 50.63) — recovering from Friday’s 41.23 but still below the signal line, indicating the rally lacks conviction.
The MACD histogram is deeply negative at −1,266.71 (MACD: 898.29, signal: −368.42) — the bearish momentum signal persists despite two consecutive green closes. The index touched 182,800 intraday before failing at the 50-day SMA (~181,518), which now becomes the key resistance.
Resistance: 180,598 (intermediate SMA) → 181,518 (50-day SMA) → 182,800 (Tuesday’s high) → 183,000 (round number).
Support: 179,850 (Tuesday’s low / Monday’s close) → 179,053 (lower SMA) → 176,341 (lower Bollinger) → 175,824 (200-day SMA).
Today’s session is entirely event-driven. The B3 will trade through the FOMC announcement at 14:00 ET (15:00 BRT) but close before the Copom. Pre-FOMC, expect range-bound trading between 179,500–181,500.
The FOMC dot plot is the first catalyst: hawkish dots (0-1 cuts) = S&P pressure = Ibovespa sells off. Dovish surprise (2+ cuts maintained) = risk-on rally.
The Copom decision after the close will set Thursday’s open: 25 bps with data-dependent guidance is priced in; 50 bps would trigger a morning gap higher; a hold would send the index to test the 200-day SMA at ~175,824. Bias: neutral into the double event, defensive positioning warranted.
Copom Watch DECISION TODAY · AFTER B3 CLOSE
The Selic sits at 15.00%. The decision comes tonight.
The January forward guidance — “initiate flexibilization at the next meeting” — will be honored, but the magnitude has shifted decisively. The 25 bps cut to 14.75% is now the overwhelming consensus, supported by the Focus Survey’s upward revision (Selic end-2026 to 12.25%), the IPCA composition showing sticky services and rising core, Brent above $100, and the government’s R$30 billion fiscal intervention.
The 50 bps camp’s argument — that reversing explicit guidance destroys BCB credibility — still has merit. The 12-month IPCA fell from 4.44% to 3.81%, well below the 4.5% ceiling. But the qualitative deterioration (oil shock, fiscal expansion, service inflation) has made 50 bps politically and economically untenable. The DI market has already priced 25 bps; DI Jan/27 at elevated levels reflects a slower, shallower cycle.
What matters most is the statement’s forward guidance. Three scenarios:
(1) “Data-dependent” with no commitment to pace — the most likely, giving the BCB maximum flexibility as the war evolves. (2) Explicit 25 bps cadence — mildly hawkish, signals a gradual cycle. (3) Any suggestion the cycle could pause if conditions deteriorate — the most hawkish outcome, sending DI rates higher and the Ibovespa lower on Thursday morning.
The interaction with the FOMC matters: if Powell signals fewer cuts, it compresses the BCB’s room further.
Economic Calendar WEDNESDAY, MAR 18
| Time | Event | Impact |
|---|---|---|
| All Day | Iran-US War Day 19 — Iran struck UAE (Dubai airport, Fujairah, Shah gas field). Israel hit Tehran. Direct US-Iran channel activated. Hassett: war ends in 4-6 weeks. Super Wednesday: FOMC + Copom + BoC + BoJ. Nvidia GTC Day 2 | HIGH |
| 06:00 ET | Eurozone CPI (Feb) — Cons: +1.9% YoY (prev: 1.7%). Core CPI cons: +2.4% YoY. ECB rate path implications | MEDIUM |
| 07:30 | Chile GDP Q4 — Cons: +1.7% YoY (prev: +1.6%), QoQ cons: +0.30%. Key for IPSA and Chilean rate path | MEDIUM |
| 08:30 ET | US PPI (Feb) — Cons: +0.3% MoM (prev: +0.5%), +2.9% YoY. Core PPI cons: +0.3% MoM (prev: +0.8%), +3.7% YoY. Final inflation input before FOMC. Hot print shifts dot plot narrative | HIGH |
| 09:45 ET | BoC Interest Rate Decision — Cons: hold at 2.25%. Rate statement and press conference follow. CAD implications for oil-sensitive currencies | MEDIUM |
| 10:30 ET | EIA Crude Oil Inventories — Cons: −1.5M barrels (prev: +3.824M). Hormuz disruption makes inventory draws especially market-moving for Brent | MEDIUM |
| 14:00 ET | FOMC Decision + Dot Plot + Economic Projections — Cons: hold 3.50-3.75%. Dec dots showed 2 cuts; market expects reduction to 1 or 0. GDP and inflation projections critical for assessing the stagflation narrative | HIGH |
| 14:30 ET | Powell Press Conference — Focus on: how the oil shock affects the inflation outlook, whether the war changes the “higher for longer” stance, and any comment on the rate cut timeline | HIGH |
| 17:30 BRT | Copom Decision — Cons: 25 bps cut to 14.75% (from 15.00%). Forward guidance language is the real event. Data-dependent vs committed cadence vs conditional pause. Defines the DI curve and Thursday’s open | HIGH |
| 23:00 ET | BoJ Interest Rate Decision — Cons: hold at 0.75%. Governor Ueda speaks at 22:30 ET. Yen implications for global carry trade | MEDIUM |
Latin America Markets TUESDAY CLOSE
| Index | Close | Change | RSI (14) | Signal |
|---|---|---|---|---|
| Ibovespa | 180,410 | +0.30% | 46.60 | Neutral |
| IPC (Mexico) | 66,197 | +0.83% | 37.84 | Oversold |
| COLCAP (Colombia) | 2,184 | −0.05% | 39.02 | OS Watch |
| IPSA (Chile) | 10,621 | +0.34% | 40.40 | Neutral |
| MERVAL (Argentina) | 2,663,049 | +2.18% | 37.36 | Oversold |
Tuesday’s LatAm session showed a cautious recovery ahead of Super Wednesday. The MERVAL led with +2.18%, a strong short-covering bounce from deeply oversold levels (RSI 37.36). The IPC returned from Monday’s Benito Juárez holiday with +0.83% to 66,197 but RSI remains oversold at 37.84.
The Ibovespa’s +0.30% masked the intraday drama of a 3,000-point swing from high to close. COLCAP was flat at −0.05%, the weakest performer, with RSI at 39.02 near the oversold threshold. IPSA edged up 0.34% to 10,621 ahead of today’s Q4 GDP release.
The MACD picture is uniformly bearish: all five indices show negative histogram readings, confirming the recent bounces are counter-trend rallies within a broader war-driven selloff. The IPC’s histogram at −858.97 is the most extreme in the group.
Today’s four central bank decisions (Fed, BCB, BoC, BoJ) create asymmetric risk for the region: a hawkish FOMC dot plot would pressure all five indices, while a dovish surprise or de-escalation headline could trigger the violent short-covering rally that the oversold readings have been setting up.
Commodities & FX KEY MOVES
Brent settled Tuesday at $103.42 (+3.20%) on the ICE, fully reversing Monday’s 2.8% decline. WTI closed at $96.21 (+2.9%).
Iran’s escalation against UAE infrastructure — Fujairah port loadings halted, Shah gas field suspended, a tanker hit near Fujairah — drove the rebound. The UAE, OPEC’s third-largest producer, was forced to cut output by more than half.
Yet the diplomatic counter-signals persist: Bessent’s confirmation that Iranian tankers are transiting Hormuz, the direct communications channel, and Hassett’s 4-6 week timeline all suggest the market is pricing maximum disruption while the political track moves toward resolution. The EIA inventory report today (10:30 ET, cons: −1.5M barrels) is the first to capture the Hormuz disruption’s impact on US imports.
Iron Ore rebounded to ~$102 (+1.0%), snapping a multi-session decline. Dalian futures rose 1.81%. Chinese hot metal production increased in March, supporting demand. Still, port inventories remain at record levels (162M tonnes), capping the upside.
Gold fell 1.15% to ~$4,994, testing the psychologically critical $5,000 level. Rising real yields and DXY strength are pressuring the metal despite the geopolitical tailwind. The $5,000 floor has held through the war’s entire duration — a break below it would signal a rotation out of gold into USD cash and Treasuries.
USD/BRL fell to R$5.20 (−0.57%), the second consecutive decline, as the real benefited from Brent’s rise supporting Petrobras and the broader terms-of-trade improvement. The 15% Selic carry remains attractive. Tonight’s Copom is decisive: a 25 bps cut (consensus) keeps the real supported. A 50 bps cut would weaken it toward R$5.30. A hold — unlikely — would strengthen it toward R$5.10.
DXY fell ~0.50% to ~99.50, sliding for a second session as the safe-haven bid faded. The dollar weakened against all G10 currencies, with the AUD outperforming after the RBA hiked. The FOMC tonight is the key: if the dot plot maintains two cuts, DXY likely breaks below 99. If it signals zero or one cut, DXY rebounds toward 100.50.
Risk Map BULL vs BEAR
| Bull Case | Bear Case |
|---|---|
| Diplomatic signals are accelerating faster than the military escalation — A direct US-Iran communications channel, Bessent allowing Iranian tankers through Hormuz, and Hassett’s “4-6 weeks, ahead of schedule” timeline all suggest the political architecture for de-escalation is forming. If a ceasefire framework emerges within the next 2-3 weeks, oil collapses to $85-90 and LatAm equities see a 5-8% relief rally.
The Copom at 25 bps preserves credibility while acknowledging reality — A 25 bps cut honors the forward guidance without ignoring the oil shock. If the statement is data-dependent and dovish in tone, the DI curve flattens, banks rally, and the Ibovespa retakes the 50-day SMA on Thursday. Oversold LatAm indices are coiled for a snap-back — IPC at RSI 37.84, MERVAL at 37.36, COLCAP at 39.02. The MERVAL’s 2.18% bounce on Tuesday shows the short-covering mechanism works. Any catalyst — dovish FOMC, ceasefire headline, Hormuz reopening — triggers simultaneous rallies across the region. Gold testing $5,000 suggests inflation fear may be peaking — The fact that gold is falling despite a hot war suggests the market is beginning to price peak disruption. If Brent stabilizes near $100-103 rather than pushing to $110+, the inflation scare subsides and central banks regain policy space. |
Iran’s escalation against UAE infrastructure is a new and dangerous front — Striking Dubai airport, Fujairah, and the Shah gas field means the war is no longer contained to Iran-Israel. The UAE cutting output by 50%+ removes ~1.5M bpd from global supply. If Iran continues targeting Gulf state infrastructure, Brent moves to $115-120 and the global recession risk spikes.
A hawkish FOMC dot plot could erase the entire two-day recovery — If the dot plot shows 0-1 cuts for 2026 (down from 2), the US rate curve reprices higher, the 10Y breaks above 4.30%, credit spreads widen, and the S&P re-tests its 2026 low. LatAm equities, already fragile, would sell off across the board. The trucker strike threat adds a domestic wildcard to the Copom — DI rates rose Tuesday on speculation about a possible trucker strike. If truckers block highways over diesel prices (the government’s R$30B package may not be enough), it creates a supply shock within Brazil — exactly when the BCB is trying to ease. The 2018 trucker strike cost the economy ~R$40 billion. The 25 bps cut may satisfy nobody — Doves see it as insufficient given the forward guidance commitment. Hawks see it as premature given $103 Brent and the fiscal expansion. A divided Copom with a split vote would signal institutional uncertainty at the worst possible time, pressuring the real and DI rates simultaneously. |
Positioning BOTTOM LINE
Super Wednesday is the culmination of three weeks of war, oil chaos, and monetary uncertainty. The Ibovespa at 180,410 sits between the 50-day SMA at ~181,518 (which it tested and rejected Tuesday) and the 200-day SMA at ~175,824. As tracked in our Ibovespa market reports, the FOMC at 14:00 ET defines the session; the Copom after the close defines Thursday. Between them, there is no safe place to hide.
The positioning call is event-neutral through the FOMC. Do not add equity exposure before 14:00 ET.
Petrobras and PRIO remain the only equity positions worth holding through the double-header — both benefit from $103 Brent regardless of which central bank surprises. If the FOMC delivers a dovish surprise (2+ cuts maintained), buy the Ibovespa on any dip toward 179,000 for a ride to 183,000+. If the dot plot is hawkish (0-1 cuts), go fully defensive and wait for Thursday’s Copom reaction.
The consensus 25 bps cut is priced in; the forward guidance language is what moves the needle. A data-dependent statement with no commitment to pace is the base case and would be neutral-to-positive. Any hint of a conditional pause would send the Ibovespa to test the 200-day SMA. Watch the DI curve post-Copom for the institutional verdict on the BCB’s credibility.
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.