Copom Eve
This is part of The Rio Times’ daily Brazil Financial Morning Call, covering Latin American financial markets. The Copom begins its two-day meeting tomorrow. The week that just ended was brutal: the Ibovespa lost 5.04% from Monday’s close of 180,915 to Friday’s 177,653, with the index shedding 0.91% on Friday alone after Thursday’s 2.55% crash. The S&P 500 closed at 6,672.62, its lowest level of 2026, posting its first three-week losing streak in a year. Brent settled Friday at $103.14 (+2.67%), the second consecutive close above $100.
Then the weekend escalated. Trump ordered strikes on Kharg Island — Iran’s oil export lifeline — on Friday evening, claiming military targets were destroyed while leaving oil infrastructure “unscathed.” He warned the US would consider hitting crude infrastructure if Iran continues to block Hormuz. Brent surged to ~$105 in early Monday trading, with WTI breaching $100. Iran reportedly approved two Indian LPG tankers through the Strait — a possible signal of selective opening. S&P futures were volatile overnight, last seen −0.2%. Trump is also pressuring Beijing to help reopen Hormuz, threatening to delay his China trip.
Friday’s US data painted a stagflationary picture: Q4 GDP was revised sharply lower to +0.7% (from the initial +1.4% estimate), Core PCE held at +3.1% YoY, and headline PCE came in at +2.8% — slightly cooler than forecast but still sticky. Michigan Consumer Sentiment fell. The data effectively confirmed the growth-slowdown-with-sticky-inflation setup that makes the Fed’s path impossible: cut and fuel inflation, or hold and deepen the recession.
The BCB Focus Survey at 07:25 BRT is this morning’s key domestic event — the last Focus before the Copom decides tomorrow. If the survey shows a material upward revision to IPCA expectations (beyond the 3.91% from two weeks ago) or a Selic endpoint above 12.50%, it formally narrows the BCB’s room to cut 50 bps. The IBC-Br economic activity index (08:00 BRT) provides a GDP proxy. The NY Empire State Manufacturing Index (08:30 ET) and US Industrial Production (09:15 ET) provide real-economy data. Nvidia’s GTC conference begins today. War Day 17 — Copom T−2.
Three Things That Matter
| Friday | Ibovespa −0.91% to 177,653 (week: −5.04%). S&P 500 −1.52% to 6,673 (new 2026 low, 3rd losing week). Brent +2.67% to $103.14. WTI +3.11% to $98.71. GDP Q4 revised to +0.7% (from +1.4%). Core PCE +3.1% YoY. PCE headline +2.8% (slightly below est). USD/BRL ~R$5.25. Trump struck Kharg Island Friday night — warned he’ll hit oil infrastructure next |
| Weekend | Kharg Island strikes — military targets only (Trump claims). Iran approved 2 Indian LPG tankers through Hormuz — possible selective opening signal. Brent ~$105, WTI ~$100 in pre-market. Trump pressuring China to help reopen Hormuz, threatening to delay China trip. S&P futures −0.2%. Asia mostly lower. Week 3 of War — Hormuz still effectively closed. IEA 400M barrel SPR release ongoing |
| Today | BCB Focus Survey (07:25 BRT) — last before Copom. Previous: IPCA 3.91%, Selic 12.13%. IBC-Br economic activity (08:00 BRT). NY Empire State Mfg (08:30 ET, cons: 4.00). US Industrial Production (09:15 ET, cons: +0.1%). NAHB Housing Index (10:00 ET, cons: 37). Nvidia GTC begins. Mexico holiday (Benito Juárez). War Day 17. Copom T−2 |
Where We Left Off FRIDAY, MAR 13 — B3 CLOSE
The Ibovespa closed Friday at 177,653.31 (−0.91%), extending the selloff for a second consecutive session. The index opened near 179,285 (essentially Thursday’s close), rallied briefly to 180,996 in the first hour, then sold off through the afternoon to a low of 177,322 before a small bounce into the close. Volume was elevated. On the week, the Ibovespa lost 1.80% — modest only because the Mon–Wed rally masked Thursday–Friday’s 3.42% combined decline. From the war’s start, the index is now down over 8% from its late-February highs.
In New York, the S&P 500 fell 1.52% to 6,672.62 — its lowest close of 2026 and third consecutive losing week. The Dow dropped 1.56% to 46,678, ending below 47,000 for the first time this year. The Nasdaq shed 1.78% to 22,312. Nine of eleven S&P sectors closed red. Brent settled at $103.14 (+2.67%), WTI at $98.71 (+3.11%). Q4 GDP was revised sharply down to +0.7% annualized (from +1.4%), while Core PCE held at +3.1% YoY — the textbook stagflation confirmation: growth collapsing while inflation stays sticky.
After the close, Trump ordered strikes on Iran’s Kharg Island, the country’s primary oil export terminal. He claimed military targets were destroyed while oil infrastructure was left intact, but warned he would “consider” hitting crude facilities if Hormuz remains blocked. Brent surged to ~$105 in weekend trading. In a potentially significant development, Iran reportedly approved two Indian LPG tankers to transit the Strait — the first authorized passage since the blockade began.
Market Snapshot DATA AS OF FRI, MAR 13 CLOSE
| Indicator | Close | Change |
|---|---|---|
| Ibovespa | 177,653 | −0.91% |
| USD/BRL | ~R$5.25 | +0.14% |
| S&P 500 | 6,673 | −1.52% |
| Nasdaq | 22,312 | −1.78% |
| 10Y Treasury | ~4.30% | +2 bps |
| Gold (Spot) | ~$5,200 | −0.96% |
| Brent Crude | $103.14 | +2.67% |
| Iron Ore (62%) | ~$106 | −1.85% |
| DXY | ~99.50 | +0.30% |
What to Watch MONDAY CATALYSTS
The BCB Focus Survey at 07:25 BRT is the session’s domestic anchor — the last reading before the Copom begins deliberations tomorrow. Two weeks ago, IPCA 2026 was at 3.91% and Selic end-2026 at 12.13%. After the IPCA miss (+0.70%), the oil export tax, the R$30 billion fiscal package, and $103 Brent, the market expects material upward revisions. If IPCA 2026 jumps above 4.0% or Selic moves above 12.50%, the 50 bps cut is effectively dead and 25 bps becomes the base case.
The IBC-Br economic activity index (08:00 BRT, prev: −0.20%) provides a GDP proxy that the Copom will factor into its growth assessment. In the US, the NY Empire State Manufacturing Index (08:30 ET, cons: 4.00, prev: 7.10) tests the industrial sector’s health under oil pressure. US Industrial Production (09:15 ET, cons: +0.1%) and NAHB Housing Market Index (10:00 ET, cons: 37) round out the data.
The Kharg Island strikes and Iran’s selective tanker approval create a contradictory backdrop: escalation and potential de-escalation in the same weekend. If more tankers are approved through Hormuz, oil could pull back from $105. If the Kharg strikes provoke Iranian retaliation against oil infrastructure, Brent targets $115–120. Nvidia’s GTC conference begins today — the AI narrative’s ability to support the Nasdaq in this environment will be tested. Mexico is on holiday (Benito Juárez), so IPC will not trade.
Ibovespa Setup TECHNICAL LEVELS
The Ibovespa closed Friday at 177,653.31 (−0.91%). Daily RSI reads 41.23 (MA: 54.03) — approaching oversold territory and falling. The MACD histogram has flipped negative at −1,604 (MACD: −24.92, signal: 1,579.46) — the first negative histogram since the early war days, signaling bearish momentum has retaken control. The 50-day SMA at ~181,508 is now well overhead. The 200-day SMA at ~175,991 is the critical structural floor, just 1,662 points below Friday’s close.
Resistance: 178,280 (intermediate SMA) → 179,284 (Thursday’s close) → 180,996 (Friday’s high) → 181,508 (50-day SMA).
Support: 177,322 (Friday’s low) → 177,047 (lower SMA cluster) → 175,991 (200-day SMA) → 175,384 (lower Bollinger Band).
With Brent at $105 pre-market and the Kharg Island strikes adding geopolitical premium, the Ibovespa faces immediate downside pressure toward 176,000–177,000 at the open. The 200-day SMA at ~175,991 is the line in the sand: a close below it would confirm the war has broken the medium-term uptrend that held since mid-2025. The Focus Survey at 07:25 sets the domestic tone. A dovish surprise (IPCA expectations stable, Selic unchanged at 12.13%) could limit losses and keep the 200-day intact. A hawkish Focus sends the index through the 200-day. Bias: defensive, watching the 200-day SMA.
Copom Watch NEXT MEETING: MAR 17-18 · T−2 DAYS
The Selic sits at 15.00% with 2 days to Copom. This is the most uncertain rate decision since 2023. The January statement’s forward guidance — “initiate flexibilization at the next meeting” — is being tested by the most adverse combination of factors imaginable: $103+ Brent, a hawkish IPCA miss, a R$30 billion fiscal intervention, DI Jan/27 at 13.99%, and a government that imposed a 12% oil export tax on the eve of the decision.
The market is split three ways: 50 bps cut (honoring forward guidance, supported by 12-month IPCA falling from 4.44% to 3.81%), 25 bps cut (data-dependent compromise between guidance and the oil shock), and hold (if Monday’s Focus Survey shows a material deterioration in expectations). The 50 bps camp argues the BCB loses credibility if it reverses guidance based on a one-month IPCA miss driven by seasonal education costs. The 25 bps camp argues the qualitative IPCA composition (sticky services, rising core) and the oil shock justify caution. The hold camp argues $105 Brent and the government’s fiscal intervention make any cut premature.
Today’s Focus Survey is the tiebreaker. If IPCA 2026 expectations hold near 3.91% and Selic stays at 12.13%, the BCB has cover for 50 bps. If IPCA jumps above 4.0% and the Selic endpoint rises, 25 bps is the path of least resistance. The market will also parse any BCB signals during Monday’s deliberation prep.
Economic Calendar MONDAY, MAR 16
| Time | Event | Impact |
|---|---|---|
| All Day | Iran-US War Day 17 — Trump struck Kharg Island Friday. Iran approved 2 Indian tankers through Hormuz. Brent ~$105. Trump pressuring China on Hormuz. Mexico holiday (Benito Juárez). Nvidia GTC begins. Copom T−2 | HIGH |
| 07:25 BRT | BCB Focus Survey — Last before Copom. Previous: IPCA 2026 at 3.91%, Selic 12.13%. Watch for hawkish revisions after IPCA miss, $100+ oil, and R$30B fiscal package. If IPCA jumps above 4.0%, the 50 bps cut is dead | HIGH |
| 08:00 BRT | Brazil IBC-Br Economic Activity (Jan) — Prev: −0.20%. GDP proxy that informs the Copom’s growth assessment. Weak reading supports the case for cutting | MEDIUM |
| 08:30 ET | NY Empire State Manufacturing Index (Mar) — Cons: 4.00 (prev: 7.10). Factory sector health under oil pressure. A negative reading confirms US manufacturing recession | MEDIUM |
| 09:15 ET | US Industrial Production (Feb) — Cons: +0.1% (prev: +0.7%). Capacity Utilization (cons: 76.2%). Slowdown from January’s strong reading expected | MEDIUM |
| 10:00 ET | NAHB Housing Market Index (Mar) — Cons: 37 (prev: 36). Homebuilder sentiment in a rising-rate, rising-oil environment | LOW |
| MAR 17–18 | Copom + FOMC Meetings — BCB split between 50 bps, 25 bps, and hold. Today’s Focus Survey is the final input. Fed widely expected to hold. Decision Wednesday 14:00 ET (FOMC) / after close (Copom) | HIGH |
Latin America Markets FRIDAY CLOSE
| Index | Close | Change | RSI (14) | Signal |
|---|---|---|---|---|
| Ibovespa | 177,653 | −0.91% | 41.23 | Neutral |
| IPC (Mexico) | 65,649 | −0.66% | 34.39 | Oversold |
| COLCAP (Colombia) | 2,181 | +0.39% | 39.92 | OS Watch |
| IPSA (Chile) | 10,467 | +0.64% | 41.01 | Neutral |
| MERVAL (Argentina) | 2,642,584 | −1.96% | 37.39 | Oversold |
Friday’s LatAm picture was mixed, with COLCAP (+0.39%) and IPSA (+0.64%) posting small bounces while Ibovespa (−0.91%), IPC (−0.66%), and MERVAL (−1.96%) continued lower. The IPC at RSI 34.39 is now deeply oversold — its lowest reading of the entire war period. MERVAL remains oversold at 37.39. The Ibovespa at 41.23 is approaching oversold territory for the first time since the March 6 low. Mexico is closed Monday (Benito Juárez holiday), so IPC will not trade.
The Kharg Island strikes add a new layer of risk for LatAm: if Iran retaliates against oil infrastructure, the entire region faces another Brent spike and further equity pressure. Conversely, the two Indian tankers approved through Hormuz suggest Iran may be selectively reopening the Strait — which would be a significant de-escalation signal. The Copom decision Wednesday is the near-term catalyst for the Ibovespa specifically; the rest of the region trades on the oil/geopolitical narrative.
Commodities & FX KEY MOVES
Brent settled Friday at $103.14 (+2.67%), the second consecutive close above $100. In weekend/Monday pre-market trading, Brent surged to ~$105 after Trump’s Kharg Island strikes. WTI settled Friday at $98.71 (+3.11%) and was last near $100 in pre-market. The Kharg strikes are the biggest escalation yet — targeting Iran’s oil export hub directly. Trump’s warning that he would hit crude infrastructure if Hormuz stays closed creates an asymmetric risk: the threat itself is bullish for oil (disruption of Iran’s ~2.5M bpd export capacity) but could also force Iran to negotiate. The two Indian tankers approved through Hormuz are a potential off-ramp signal.
Iron Ore continued weakening to ~$106 (−1.85%), its fourth consecutive decline. Global recession fears are dominating the commodity complex outside of oil.
Gold dipped ~0.96% to ~$5,200 as rising yields and DXY strength sapped safe-haven demand. Gold is holding the $5,000 structural floor despite the headwinds.
USD/BRL edged up to ~R$5.25 (+0.14%), consolidating after Thursday’s 1.61% spike. The real is caught between positive carry (15% Selic) and the fiscal uncertainty created by the oil export tax and diesel subsidy package. The Copom decision Wednesday will determine the next direction: a 50 bps cut weakens the carry trade; a 25 bps cut or hold supports the real but signals a slower easing cycle.
DXY rose ~0.30% to ~99.50, extending its recovery from the week’s low of 98.50 as safe-haven flows returned. The dollar’s direction remains tied to the war narrative: escalation = dollar strength, de-escalation = dollar weakness.
Risk Map BULL vs BEAR
| Bull Case | Bear Case |
|---|---|
| Iran approved two tankers through Hormuz — the first since the blockade — If this signals a selective reopening, the entire war premium in oil begins to unwind. Even partial Hormuz transit (10 tankers/day vs the pre-war 24) would ease supply fears and pull Brent below $95, unlocking the Copom cut and triggering a LatAm rally.
PCE at 2.8% came in slightly below forecast — inflation is peaking — The Fed’s preferred inflation gauge showed annual inflation below expectations. Combined with GDP at 0.7%, the data supports the case that the US economy is cooling fast enough to justify eventual rate cuts, even if March is too soon. The Copom may still deliver 50 bps to protect credibility — Reversing explicit forward guidance based on a one-month IPCA miss driven by seasonal education costs would damage the BCB’s communication credibility. The 12-month IPCA fell from 4.44% to 3.81%, well below the 4.5% ceiling. A 50 bps cut with hawkish language about oil risks is a viable middle path. Oversold LatAm indices set up for a violent short-covering rally — IPC at RSI 34.39, MERVAL at 37.39, and COLCAP at 39.92 are at extreme levels. Any de-escalation headline — a ceasefire, more tanker approvals, or a US-Iran negotiation channel — triggers 3–5% bounces across the region within hours. |
Kharg Island strikes are the most dangerous escalation yet — Targeting Iran’s oil export terminal — even limiting to military assets — is a direct threat to the country’s economic lifeline. If Iran retaliates by attacking Saudi or UAE oil infrastructure, or by escalating mine warfare, Brent targets $120–130. The two Indian tankers may be a tactical exception, not a policy shift.
GDP at 0.7% confirms the US is near recession — but the Fed can’t cut — Q4 GDP was revised from 1.4% to 0.7% while Core PCE stays at 3.1%. The Fed is trapped: it cannot cut without fueling oil-driven inflation expectations, and it cannot hike without crashing an already-weakening economy. This trap extends to every EM central bank, including the BCB. The R$30B fiscal package poisons the Copom’s decision framework — The oil export tax, diesel subsidy, and zeroed PIS/Cofins represent election-year fiscal loosening disguised as crisis management. The Copom must now decide whether to cut rates into a fiscal expansion — exactly the policy mix that kept the Selic at 15% through 2025. A 50 bps cut into this backdrop risks being seen as political capitulation. The 200-day SMA at ~175,991 is only 1,662 points away — A breach of the 200-day SMA would be the first since the rally began in mid-2025, confirming a medium-term trend break. The MACD histogram has turned negative. RSI is falling toward oversold. The technical picture is deteriorating rapidly ahead of the most uncertain Copom in years. |
Positioning BOTTOM LINE
Monday opens Copom week with the market in crisis mode. The Ibovespa at 177,653 is 1,662 points above the 200-day SMA at ~175,991 — the structural floor that, if broken, confirms the war has ended the bull trend. Brent at ~$105 with Kharg Island strikes and two Indian tankers approved through Hormuz creates maximum information asymmetry: the war could be nearing a turning point or escalating to its most dangerous phase. The Focus Survey at 07:25 BRT is the immediate catalyst.
The positioning call is fully defensive ahead of the Copom. Cash is king until Wednesday’s decision provides clarity. The only equity position worth holding is Petrobras — despite the 12% export tax, the company earns more at $103 Brent than the tax takes away. PRIO remains the cleaner oil play without export tax exposure. Exit everything else: banks face DI at 14%, rate-sensitives face an uncertain Copom, Vale faces $106 iron ore and global recession. The Focus Survey sets the day’s direction. If IPCA expectations hold at 3.91% and the tanker-transit signal gains traction, a relief rally toward 179,000 is possible. If Focus shows hawkish revisions and Brent stays above $105, the Ibovespa tests the 200-day SMA at 175,991. The Copom’s credibility — and the medium-term trend — hangs on Wednesday’s decision.
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.