Carnival Edition
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: The world takes a breath. Brazil is dark for Carnival (back Wednesday afternoon), the U.S. is closed for Presidents’ Day, and mainland China remains shuttered for Lunar New Year. The triple-holiday vacuum creates two days of dead air before a data-dense second half of the week: FOMC Minutes (Thursday), the long-delayed Q4 2025 GDP advance estimate (Friday), the December PCE deflator — the Fed’s preferred inflation gauge — and S&P Global flash PMIs, all landing in quick succession. Layer in Walmart earnings (Thursday pre-market) and you have the most consequential 72 hours for global macro since the year began.
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The Ibovespa enters the break at 186,464 — up 15.73% YTD, having briefly touched the 190,000 milestone intraday last week — with every structural tailwind still intact: foreign inflows, a confirmed March Selic cut, earnings momentum, and a benign U.S. inflation print (CPI at 2.4%, below consensus) that dragged the 10-year Treasury to 4.10%. The question is not if the rally resumes but what happens during the gap that could change the calculus.
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Where We Left Off
\nClosing levels as of Friday, February 13 — pre-Carnival snapshot
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| Indicator | Level | Fri Chg | Weekly Chg | YTD |
|---|---|---|---|---|
| Ibovespa | 186,464 | −0.69% | +1.92% | +15.73% |
| USD/BRL | 5.23 | +0.60% | +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 | 4.10% | −6.8bps | −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 | 96.82 | +0.04% | −0.02% | weakening trend |
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What to Watch Today
\nMonday, February 16 — Triple-holiday thin markets
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The big picture: Brazil (Carnival), the U.S. (Presidents’ Day), and China (Lunar New Year) are all closed today. That means no B3, no NYSE/Nasdaq cash session, no mainland China equities. Liquidity is at its thinnest of the year. The few data points and speeches that do land today will set the tone for tomorrow’s fuller session — and for Brazil’s Wednesday reopening.
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BCB Focus Survey readout (6:25 AM BRT). The weekly consensus survey from the Central Bank. Watch for any movement in the year-end Selic expectation (currently 12.25%) and IPCA forecasts (five consecutive weeks of declines, now at 3.97%). Any upward revision would challenge the dovish Copom narrative heading into March.
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Fed Governor Bowman speaks (8:25 AM ET). With U.S. markets closed, this won’t move prices in real time — but the remarks will be parsed overnight. Bowman has historically leaned hawkish. Any pushback on rate-cut timing would show up in Tuesday’s Treasury futures.
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Canada CPI (8:30 AM ET). January inflation data. Relevant as a G7 read on global disinflation trends and because the BoC is further ahead in its cutting cycle than the Fed — confirmation of cooling could reinforce the “central banks are easing” narrative that supports EM carry.
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Colombia Q4 GDP (10:00 AM local). Colombia is one of the two major LatAm markets open today (with Mexico). A strong print supports the EM growth narrative; a miss could weigh on COLCAP, which rallied +1.73% on Friday.
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RBA Minutes (7:30 PM ET). The Reserve Bank of Australia released minutes from its February meeting. Australia is a key commodity peer — any signals on Chinese demand expectations or commodity pricing will be relevant for Brazil’s mining and agribusiness sectors.
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The Ibovespa Setup
\nWhat the Wednesday afternoon reopening will look like
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B3 resumes with an abbreviated Ash Wednesday session (1PM–5:55PM BRT). Traders will compress two full days of global price action — the U.S. Tuesday session, Wednesday morning futures, plus any overnight developments — into a four-hour window with structurally lower liquidity. This creates amplified moves in both directions.
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The bull case: The Ibovespa’s structural drivers are all intact and arguably strengthening. Foreign inflows have been the dominant force, with the global rotation out of U.S. tech into EM value and commodities directly benefiting Brazil’s index composition. The March Copom meeting (March 17–18) is now firmly expected to deliver the first Selic cut — Galípolo explicitly signaled easing, using language like “calibration” and “parsimony” that the market read as 25bps rather than 50bps. The Focus survey shows the IPCA forecast falling for five consecutive weeks to 3.97%, approaching the 3% target. Year-end Selic consensus is 12.25%, implying 275bps of cuts. The CPI print at 2.4% reinforced the U.S. rate-cut timeline, and the 10Y at 4.10% makes Brazil’s 15% Selic carry even more attractive.
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The bear case: The Ibovespa hit 190,561 intraday on Wednesday then pulled back 2.1% over two sessions to close Friday at 186,464. Daily RSI at ~74.6 remains in overbought territory, with the weekly RSI at 67 still elevated. The AI tech rout could deepen while Brazil is dark — if the Nasdaq sells off another 2–3% on Tuesday, the gap risk becomes real. A hot Q4 GDP print on Friday could reverse the Treasury rally and strengthen the dollar, compressing EM inflows. And Carnival liquidity thins breed volatility: the Wednesday reopening is historically whippy.
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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 (key Bollinger mid-band). Resistance: 187,766 (Thursday’s close, now near-term resistance) → 190,561 (all-time intraday high, Wednesday) → 193,875+ (Fibonacci 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
\nThe countdown to Brazil’s first rate cut in over a year
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The March 17–18 Copom meeting is now the single most important domestic event on the horizon. After holding the Selic at 15% for five consecutive meetings, Galípolo has explicitly opened the door to easing. The January statement shifted language for the first time, and his subsequent speech in São Paulo used “calibration” and “parsimony” — terms the market interpreted as confirmation that cuts begin in March, likely at 25bps rather than 50bps.
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The data supports it: the Focus survey’s median 2026 IPCA forecast has fallen for five straight weeks to 3.97%. The real has strengthened 4.7% YTD against the dollar. December retail sales were weak (-0.4% m/m). The labor market, while still tight, is showing early signs of cooling. All of this gives Copom the cover to begin a gradual easing cycle.
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The market’s year-end Selic consensus is 12.25%, implying roughly 275bps of cuts over the remaining meetings — an aggressive pace that assumes consistent 25–50bp moves. The debate between 25bp and 50bp for the first cut matters enormously: 25bp signals caution and preserves credibility; 50bp signals urgency about growth and would accelerate the BRL weakening that Galípolo has been trying to avoid. Between now and March 17, the key inputs are: this week’s FOMC Minutes and PCE (which shape the Fed rate-cut path), the February IPCA-15 preview (due early March), and any fiscal surprises from Brasília.
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Verdict
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The March cut is locked in. The only question is size and tone. A 25bp cut with cautious language would be the “Galípolo consensus” — protecting credibility while beginning the cycle. The Ibovespa has already priced in the start of easing; what moves the needle now is the pace and the terminal rate. Every data point this week — especially the U.S. macro releases — feeds directly into the March Copom calculus, because the Selic-Fed spread is the engine of the carry trade driving foreign inflows.
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Economic Calendar
\nMonday, February 16, 2026
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GLOBAL HOLIDAY MAP — Severely reduced liquidity across all major markets today
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| Time (ET) | Event | Impact |
|---|---|---|
| All Day | Brazil — Carnival (B3 closed Mon & Tue, returns Wed 1PM) | HOLIDAY |
| All Day | United States — Washington’s Birthday (Presidents’ Day) | HOLIDAY |
| All Day | Argentina — Carnival / Venezuela — Carnival / Ecuador — Carnival | HOLIDAY |
| All Day | China — Chinese New Year / South Korea — Korean New Year | HOLIDAY |
| All Day | Canada — Family Day | HOLIDAY |
| 01:30 | WPI Inflation (YoY) (Jan) — Cons: 1.25% / Prev: 0.83% | LOW |
| 01:30 | WPI Food / WPI Fuel / WPI Manufacturing (Jan) | LOW |
| 04:00 | Trade Balance (Jan) — Cons: −$26.14B / Prev: −$25.04B | LOW |
| 04:00 | FDI (Jan) — Prev: −9.50% | MEDIUM |
| 05:00 | Eurozone Industrial Production (Dec) — MoM Cons: −1.5% / YoY Cons: 1.2% | MEDIUM |
| 05:00 | Eurogroup Meetings | MEDIUM |
| 05:30 | German 12-Month Bubill Auction — Prev: 2.004% | LOW |
| 05:30 | Business Confidence (Dec) — Prev: 132.3 | LOW |
| 06:00 | Bundesbank Monthly Report / Reserve Assets Total | LOW |
| 06:25 | BCB Focus Market Readout \nKey for IPCA/Selic expectations — watch for 6th straight downward revision in 2026 inflation. |
HIGH (BR) |
| 08:15 | Housing Starts (Jan) — Cons: 266.0K / Prev: 282.4K | LOW |
| 08:25 | FOMC Member Bowman Speaks \nHawkish lean — watch for any pushback on rate-cut expectations ahead of Wed FOMC Minutes. |
HIGH |
| 08:30 | CPI (Jan) — YoY Cons: n/a / Prev: 2.4% / MoM Prev: −0.2% \nCanada inflation read — implications for BoC rate path and CAD. |
MEDIUM |
| 08:30 | Trimmed CPI (YoY) (Jan) — Prev: 2.7% / Manufacturing Sales (Dec) — Cons: 0.5% | LOW |
| 09:00 | French 3/6/12-Month BTF Auctions | LOW |
| 10:00 | GDP (Q4) — YoY Cons: 3.1% / Prev: 3.6% / QoQ Prev: 1.2% \nColombia growth read — COLCAP at highs, watch for confirmation. |
MEDIUM |
| 10:00 | GDP (YoY) (Dec) — Prev: 1.53% / Unemployment Rate (Jan) — Prev: 5.9% | LOW |
| 12:40 | Bundesbank President Nagel Speaks | MEDIUM |
| 16:45 | FPI (MoM) (Jan) — Prev: −0.3% | LOW |
| 19:30 | RBA Meeting Minutes \nPost-rate cut details — implications for global dovish pivot narrative. |
MEDIUM |
| 23:30 | Tertiary Industry Activity Index (Dec) — Prev: −2.40% | LOW |
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Calendar Takeaway
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Despite the holiday wall, today is not entirely dead. The BCB Focus readout (6:25 AM) is the single most important Brazil data point — a sixth consecutive downward revision in 2026 IPCA expectations would further cement the March cut. FOMC Member Bowman (8:25 AM) speaking on a U.S. holiday is unusual and could move rates expectations. Colombia Q4 GDP gives a LatAm growth read. And the overnight RBA Minutes will shape the “global easing” narrative heading into Tuesday’s reopening.
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Risk Map
\nWhat could go wrong — and right — during the break
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Hot GDP / PCE Combo
\nIf Q4 GDP prints above 3% and core PCE stays at 3.1%+, the “higher for longer” narrative reasserts itself. Treasury yields spike, dollar strengthens, rate-cut expectations get pushed to H2 or beyond. The Ibovespa would gap down on Wednesday as the carry trade unwinds. This is the single biggest risk.
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AI Rout Deepens While Brazil Is Dark
\nThe Nasdaq lost 2.1% last week. If Tuesday/Wednesday bring another leg down in tech — a Palo Alto miss, more AI disruption headlines — the global risk-off sentiment could bleed into EM. Brazil can’t hedge during the gap. The Wednesday reopening would absorb the full shock.
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Goldilocks GDP + Dovish FOMC
\nGDP comes in at 1.5–2.0%, confirming soft landing. FOMC minutes reveal growing consensus for June cut. PCE confirms CPI trend. Treasury yields fall further. Dollar weakens. Foreign inflows into EM accelerate. The Ibovespa retests 190,000 by Thursday.
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China Restocking Lifts Commodities
\nPost-Lunar New Year restocking drives iron ore above $105 and copper higher. Vale, CSN, and Gerdau rally. Combined with the March Copom cut expectations, the Ibovespa’s commodity-heavy composition benefits disproportionately. This would be a powerful tailwind independent of U.S. macro.
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LatAm Markets Snapshot
\nFriday closes — divergence under the surface
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| Index | Close | Fri Chg | RSI (daily) | Status |
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| Ibovespa | 186,464 | −0.69% | 74.6 | CLOSED (Carnival) |
| S&P/BMV IPC | 71,479 | +0.83% | 66.1 | OPEN this week |
| MSCI COLCAP | 2,369 | +1.73% | 62.7 | OPEN this week |
| S&P IPSA | 10,898 | −0.70% | 60.5 | OPEN this week |
| S&P Merval | 2,816,128 | −1.25% | 50.1 | CLOSED (Carnival) |
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Key divergence: Mexico’s IPC (+0.83%) and Colombia’s COLCAP (+1.73%) remain open this week and are trading at multi-month highs, well above their 200-day moving averages. Chile’s IPSA pulled back modestly but holds its uptrend. Argentina’s Merval has entered a consolidation phase after its explosive Nov–Jan rally, with RSI at a neutral 50 — the weakest momentum reading in the region. Both Mexico and Colombia will provide real-time reads on EM sentiment while Brazil is dark, making their Tuesday/Wednesday sessions essential proxies for the Ibovespa reopening.
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Commodities Outlook
\nWhat’s ahead for the Ibovespa’s heaviest weights
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Oil: Brent at $67.75 is below the 2025 average, weighed down by Iran de-escalation and the IEA’s warning of a nearly 4M b/d surplus in 2026. The EIA forecasts Brent averaging $58 for the year. For Petrobras and Brazil’s trade balance, this is a mild headwind but manageable — the company’s breakeven is well below current levels. The key near-term variable is whether the India-Russia crude trade freeze materializes, which could tighten the Atlantic basin.
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Iron Ore: Flat at $102/t with China on holiday. The next two weeks are pivotal: post-Lunar New Year restocking historically provides a seasonal lift in late February/March. Port inventories above 160M tons cap the upside, but any signal of Chinese stimulus or construction acceleration would be a catalyst. Vale’s 2026 production guidance of 335–345Mt and declining C1 costs ($20–21.5/t) mean strong margins even at current prices.
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Gold: The whipsaw continues — crashed 3% Thursday, bounced ~1.6% Friday to ~$5,003 spot ($5,046 April futures). ANZ raised their Q2 average forecast to $5,800. The structural bull case (central bank buying, geopolitical hedging) remains intact, but the deleveraging episodes warn of stretched positioning. Gold above $4,900 is supportive; a break below would signal a deeper correction.
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Bottom Line
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This is a week to watch, not to act — at least until Wednesday afternoon. The Ibovespa’s structural position is the strongest it’s been in years: a confirmed rate-cut cycle ahead, record foreign inflows, a weakening dollar, cooling inflation on both sides of the equator, and an AI-driven global rotation that favors exactly the kind of value and commodity exposure Brazil offers. The index is up 15.73% YTD and 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 Q4 GDP and December PCE releases on Friday are a genuine binary event for the global rate-cut narrative. If both come in benign, the Treasury rally extends, the dollar weakens further, and the Ibovespa has a clear path back to 190,000 and beyond. If they come in hot, the reversal will be sharp and Brazil will absorb the shock on reduced Carnival liquidity.
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The FOMC Minutes on Thursday are the wildcard. The transition to Chair Warsh — who has historically been more hawkish on the balance sheet — adds uncertainty that wasn’t present at the last meeting. Watch for any language suggesting the committee is less dovish than markets currently assume.
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© 2026 RT Staff Reporters | Brazil Financial Morning Call
Related coverage: Ibovespa session | dollar-real exchange rate