IPCA Day
This is part of The Rio Times’ daily Brazil Financial Morning Call, covering Latin American financial markets. Wednesday delivered three major events — and the market absorbed none of them cleanly. US CPI came in at +0.3% MoM / +2.4% YoY, exactly in line. The IEA announced the largest emergency oil reserve release in history. Oracle surged 13% after-hours on a $553 billion AI backlog. Yet the S&P 500 fell 0.08%, the Dow shed 0.61%, and the 10-year Treasury yield jumped 7 bps to 4.21% — the highest close in a month. The market is telling us it doesn’t trust the peace narrative.
The IEA SPR release — potentially the largest ever — should have sent oil crashing. Instead, Brent barely moved, ending around $87–90, because three cargo ships were struck by projectiles in the Strait of Hormuz on Wednesday alone. Iran is mining the waterway. The physical reality on the ground contradicts the diplomatic optimism. WTI held near $87 despite the SPR announcement, and the EIA weekly report showed crude inventories still building. The market is pricing a floor under oil rather than a ceiling.
The Ibovespa eked out a third consecutive gain, closing at 183,969.35 (+0.28%) with Petrobras providing the lift as oil rose intraday. The index touched 185,714 before pulling back as New York turned negative. USD/BRL held steady near R$5.15. The OPEC monthly report reaffirmed its demand growth forecast of +1.4 million bpd for 2026.
Today is IPCA day — the final domestic input before the Copom’s March 17–18 decision. February’s IPCA (IBGE, 08:00 BRT) consensus is +0.65% MoM / +3.77% YoY, a seasonal acceleration from January’s +0.33% but with the 12-month trailing rate declining sharply from 4.44% to 3.77%. A reading at or below consensus would strongly support the 50 bps cut. Above +0.80% would create doubt. The CPI’s in-line reading removes the US-side obstacle: the Fed is holding, giving the BCB space. The question is now purely domestic — does Brazilian inflation justify the cut the market has priced?
Three Things That Matter
| Wednesday | US CPI: +0.3% MoM / +2.4% YoY (in-line). IEA announced largest-ever emergency SPR release — but oil barely moved as 3 cargo ships struck in Hormuz. Ibovespa +0.28% to 183,969 (high: 185,714). S&P 500 −0.08% to 6,776. Dow −0.61% to 47,417. 10Y yield +7 bps to 4.21%. VIX 25.21. Oracle +13% after-hours on $553B AI backlog. OPEC reaffirmed +1.4M bpd demand growth for 2026 |
| Yields | 10Y Treasury jumped 7 bps to 4.21% — highest close in a month. The bond market is pricing oil-driven inflation into the long end despite in-line CPI. Fed no-cut-in-2026 probability rose to 19.3% (from 14.9% Tuesday, 7% on Feb 11). The yield backup is the key risk for EM assets — if 10Y sustains above 4.20%, DI repricing follows and the Copom cut probability drops |
| Today | Brazil IPCA (Feb, IBGE, 08:00 BRT) — the Copom’s final input. Previous: +0.33% MoM / 4.44% YoY (Jan). Cons: +0.65% MoM / +3.77% YoY. At or below consensus = 50 bps cut locked. Above +0.80% = cut at risk. US Initial Jobless Claims (08:30 ET). Oracle earnings reaction in pre-market. War Day 13 — mine warfare and shipping attacks escalating despite IEA SPR. Copom T−6 days |
Where We Left Off WEDNESDAY, MAR 11 — B3 CLOSE
The Ibovespa closed its third consecutive up day at 183,969.35 (+0.28%), a modest gain that masks the session’s intraday drama. The index surged as high as 185,714 — briefly reclaiming the 50-day SMA — before pulling back sharply in the final hour as Wall Street reversed on rising Treasury yields and escalating Hormuz rhetoric. Petrobras led the advance as Brent rose intraday, with PETR4 offsetting weakness across rate-sensitive names. Telefônica Brasil (VIVT3) plunged ~7% on a UBS double-downgrade.
The US CPI for February came in exactly at consensus: +0.3% MoM headline, +2.4% YoY. Shelter rose 0.2%, food +0.4%, energy +0.6%. The in-line print was initially seen as supportive for risk assets, but the bond market had a different view: the 10-year Treasury yield surged 7 bps to 4.21%, the highest close in a month. The market is forward-pricing March CPI — which will capture the oil shock — and the probability of zero Fed cuts in 2026 rose to 19.3%.
The IEA convened its emergency meeting and announced the largest-ever coordinated SPR release — but the impact was blunted by three cargo ships being struck by projectiles in the Strait of Hormuz on the same day. The physical escalation overwhelmed the policy response: even unprecedented reserves cannot offset a mined waterway. Brent ended the session roughly flat around $87–90, holding its floor despite the SPR headline. The OPEC monthly report reaffirmed +1.4 million bpd demand growth for 2026.
In New York, the Nasdaq eked out a 0.08% gain to 22,716, the S&P 500 slipped 0.08% to 6,776, and the Dow fell 0.61% to 47,417 — dragged by Boeing (−3.2%) and Chevron. Oracle reported after the close: revenue and AI backlog of $553 billion crushed expectations, sending shares up 13% in after-hours. Gold held near $5,200. The VIX ticked up to 25.21. USD/BRL held near R$5.15.
Market Snapshot DATA AS OF WED, MAR 11 CLOSE
| Indicator | Close | Change |
|---|---|---|
| Ibovespa | 183,969 | +0.28% |
| USD/BRL | ~R$5.15 | ~flat |
| S&P 500 | 6,776 | −0.08% |
| Nasdaq | 22,716 | +0.08% |
| 10Y Treasury | 4.21% | +7 bps |
| Gold (Spot) | ~$5,200 | −0.54% |
| Brent Crude | ~$89 | +1.14% |
| Iron Ore (62%) | ~$110 | −1.79% |
| DXY | ~98.50 | −0.13% |
What to Watch THURSDAY CATALYSTS
IPCA at 08:00 BRT is the session’s defining event. Consensus expects +0.65% MoM / +3.77% YoY — already a moderation from January’s +0.33% MoM / 4.44% YoY. The market expects February to show seasonal acceleration driven by education costs and early transport adjustments. A reading at or below consensus would confirm the disinflation trend and lock in the 50 bps Copom cut. A print above +0.80% — especially if driven by transport or food categories that are oil-sensitive — would force the BCB to consider a smaller 25 bps move.
The 10-year Treasury yield at 4.21% is the new risk to watch. Wednesday’s 7 bps backup came despite in-line CPI — meaning the bond market is forward-pricing the March CPI (due in April), which will capture $90+ oil. If the 10Y sustains above 4.20%, the DI curve reprices higher, the real comes under pressure, and the Copom’s room to cut narrows regardless of the IPCA reading.
Oracle’s 13% after-hours surge on $553B AI backlog and $90B FY27 guidance will boost Nasdaq sentiment and could pull the Ibovespa’s tech-adjacent names higher. US Initial Jobless Claims (08:30 ET) provide the latest read on labor market health. The IEA’s SPR release timeline and specifics will be parsed for scale — the announcement lacked operational details, and the market needs to see barrels, not press releases.
Ibovespa Setup TECHNICAL LEVELS
The Ibovespa closed Wednesday at 183,969.35 (+0.28%). Daily RSI reads 51.53 (MA: 57.86) — holding above 50 for the second consecutive session, confirming the neutral-to-constructive momentum shift. The MACD histogram expanded to 2,356 (MACD: −1,404, signal: 951), positive and widening. The 50-day SMA at ~183,858 was touched and slightly exceeded at the close — a significant technical development.
Resistance: 184,320 (upper Bollinger area) → 184,725 (prior high reference) → 185,714 (Wednesday’s intraday high) → 186,241 (Feb 9 close).
Support: 183,858 (50-day SMA, now immediate support) → 182,021 (Wednesday’s low) → 179,319 (intermediate SMA) → 174,965 (200-day SMA).
Three consecutive up days with the index closing above the 50-day SMA is technically constructive, but Wednesday’s late pullback from 185,714 to 183,969 created a bearish upper wick. The IPCA will determine follow-through: a soft reading confirms the 50-day SMA as support and opens the path to 185,000–186,000. A hot reading sends the index back to test 182,000. Bias: constructive above the 50-day SMA, but vulnerable to yield-driven repricing.
Copom Watch NEXT MEETING: MAR 17-18 · T−6 DAYS
The Selic sits at 15.00% with 6 days to Copom. The US CPI at +0.3% / +2.4% removes the external obstacle — the Fed will hold, giving the BCB freedom to act independently. The question is now purely domestic, and the answer arrives at 08:00 BRT today with the IPCA.
The complicating factor is the 10-year Treasury yield at 4.21%. Even with in-line CPI, US yields are rising on forward oil inflation expectations. If US yields keep climbing, the DI curve steepens in sympathy, narrowing the BCB’s room. The Selic-10Y spread (15.00% − 4.21% = 10.79%) remains enormous, but the direction matters more than the level — a yield backup from 4.05% to 4.21% in one session is a signal the bond market is repricing the global inflation outlook.
If IPCA comes in at or below the +0.65% consensus — with the 12-month rate falling from 4.44% to ~3.77% — the 50 bps cut is the clear base case. The January statement’s conditionality is met, inflation is trending down, oil has retreated from $119 to $87–90, and the Focus IPCA at 3.91% is well below the 4.5% ceiling. If IPCA surprises above +0.80%, the BCB faces a dilemma: cut less (25 bps) and risk market disappointment, or hold and send a hawkish signal that could strengthen the real but depress equities.
Economic Calendar THURSDAY, MAR 12
| Time | Event | Impact |
|---|---|---|
| All Day | Iran-US War Day 13 — IEA announced largest-ever SPR release but 3 cargo ships struck in Hormuz on same day. Iran mining the Strait. Mine warfare escalating despite diplomatic talk. Brent holding ~$87–90 floor despite SPR | HIGH |
| 08:00 BRT | Brazil IPCA (Feb, IBGE) — The Copom’s final input. Cons: +0.65% MoM / +3.77% YoY (prev: +0.33% MoM / 4.44% YoY). Consensus at 0.65% already implies moderation. Below +0.60% = strongly dovish; above +0.80% = hawkish surprise. Watch transport and fuel components for oil-shock pass-through | HIGH |
| 05:00 ET | IEA Monthly Report — Updated global supply/demand forecasts incorporating Hormuz disruption. Follows yesterday’s emergency SPR release announcement — the report will quantify the expected supply shortfall | HIGH |
| 08:30 ET | US Initial Jobless Claims (cons: 214K, prev: 213K) + Housing Starts (cons: 1.340M, prev: 1.404M) + Building Permits (cons: 1.420M) + Trade Balance (cons: −$66.6B). Claims steady = NFP outlier; rising claims = recession confirmation. Housing data tests demand under elevated rates | MEDIUM |
| Pre-Mkt | Oracle (ORCL) reaction — Shares surged 13% after-hours on $553B AI backlog and $90B FY27 revenue guidance. Signals AI spending resilience despite geopolitical turmoil | LOW |
| 11:00 ET | FOMC Member Bowman Speaks — Day after in-line CPI and with 10Y at 4.21%; any hawkish commentary on oil-driven inflation could further reduce cut expectations | MEDIUM |
| 13:01 ET | US 30-Year Bond Auction — Prev yield: 4.750%. Critical test of long-end demand after the 10Y jumped 7 bps. A weak auction (wide tail) would signal duration sellers and push yields higher | MEDIUM |
| 15:00 ET | Argentina CPI (Feb) — Cons: +2.7% MoM / +32.7% YoY (prev: +2.9% / +32.4%). Continued disinflation under Milei; relevant for MERVAL, which remains oversold at RSI 37.15 | LOW |
| MAR 17–18 | Copom + FOMC Meetings — Both decide same week. Today’s IPCA is the final BCB input. Market baseline: 50 bps cut to 14.50% if IPCA cooperates; 25 bps if hawkish. Fed widely expected to hold | HIGH |
Latin America Markets WEDNESDAY CLOSE
| Index | Close | Change | RSI (14) | Signal |
|---|---|---|---|---|
| Ibovespa | 183,969 | +0.28% | 51.53 | Neutral |
| IPC (Mexico) | 67,560 | +0.24% | 41.41 | Neutral |
| COLCAP (Colombia) | 2,275 | +0.12% | 43.81 | Neutral |
| IPSA (Chile) | 10,505 | −0.94% | 41.33 | Neutral |
| MERVAL (Argentina) | 2,770,635 | +2.61% | 37.15 | Oversold |
The regional picture is mixed and losing momentum. Chile’s IPSA broke the three-day winning streak with a −0.94% decline, dragged by the global growth scare and rising yields. The Ibovespa, COLCAP, and IPC posted minimal gains — the de-escalation rally is consolidating rather than extending. MERVAL was again the outlier at +2.61%, continuing its recovery from deeply oversold levels (RSI 37.15, still the weakest in the region).
The RSI picture is stabilizing: Ibovespa at 51.53, IPC at 41.41, COLCAP at 43.81, and IPSA at 41.33 are all in neutral territory. The improvement from last week’s oversold readings is clear, but the momentum has slowed. Today’s IPCA is a Brazil-specific catalyst — a soft reading could decouple the Ibovespa from the broader LatAm consolidation if it confirms the Copom cut. Chile and Mexico remain more exposed to global growth risk and rising US yields.
Commodities & FX KEY MOVES
Brent rose modestly to ~$89 (+1.14%), shrugging off the IEA’s largest-ever SPR release announcement as three cargo ships were struck by projectiles in the Strait of Hormuz on Wednesday. WTI held near $87. The market is establishing a $85–92 range: the SPR caps the upside, mine warfare and shipping attacks cap the downside. The OPEC monthly report reaffirmed +1.4 million bpd demand growth for 2026. The EIA‘s STEO forecast of Brent above $95 for two months before falling below $80 by Q3 remains the market’s consensus assumption — but depends entirely on the Hormuz timeline.
Iron Ore continued softening to ~$110, down ~1.79%, as the energy-cost premium fades and global recession fears weigh on demand expectations. Freight premiums remain elevated but the rally that took iron ore from $111 to $114 on Monday is unwinding.
Gold pulled back modestly to ~$5,200 (−0.54%) after Tuesday’s strong +2.44% reversal. The retreat came as the 10Y yield jumped to 4.21%, increasing the opportunity cost of holding non-yielding assets. Gold remains in a $5,100–5,300 range, caught between safe-haven demand (war) and yield headwinds.
USD/BRL held near R$5.15, essentially flat on the day. The real is consolidating its war-period gains — down from R$5.2864 (Monday’s intraday high) to R$5.15 in three sessions. The structural tailwinds (oil exporter, 15% Selic, current account improvement) remain intact, but the 10Y yield backup adds a headwind. If the IPCA is dovish, the DI curve compression could push USD/BRL toward R$5.10.
DXY continued weakening to ~98.50 (−0.13%), its lowest level since before the war. The dollar is losing its safe-haven premium as the de-escalation trade gains traction, but the yield backup is providing a partial floor. EUR/USD remains near 1.16+ levels.
Risk Map BULL vs BEAR
| Bull Case | Bear Case |
|---|---|
| IPCA at or below +0.65% consensus would confirm disinflation and lock in 50 bps Copom cut — The BCB’s January conditionality is met if February IPCA comes in at consensus, with the 12-month rate falling sharply from 4.44% to ~3.77%. A 50 bps cut to 14.50% would be the first rate cut in nearly two years, triggering a powerful signal for rate-sensitive equities, compressing the DI curve, and potentially pushing the Ibovespa through the 50-day SMA toward 186,000.
IEA SPR release creates a structural oil ceiling — Even though the initial market reaction was muted, the operational release of 100+ million barrels over the coming weeks will cap Brent’s upside. The EIA’s $80-by-Q3 forecast assumes this. If combined with any de-escalation, Brent could break below $85, removing the Copom’s last obstacle. Oracle’s AI earnings prove tech spending is resilient — $553B backlog and 13% after-hours surge show that enterprise AI investment is accelerating despite geopolitical chaos. This supports Nasdaq and global risk appetite. Ibovespa reclaimed the 50-day SMA — technical momentum is building — Three consecutive up days, RSI above 50, MACD histogram expanding positive, and a close above the 50-day SMA create the technical setup for a move toward 186,000+. |
10Y Treasury at 4.21% is pricing forward inflation the market hasn’t seen yet — The bond market ignored in-line CPI and jumped 7 bps because March CPI (reporting in April) will capture $90 oil. The probability of zero Fed cuts in 2026 is now 19.3% — up from 7% a month ago. If the 10Y sustains above 4.20%, EM rate cuts become harder to justify and the DI curve steepens.
Three ships struck in Hormuz on the same day as the SPR announcement — The largest-ever reserve release couldn’t push oil lower because the physical disruption is escalating. Iran is mining the Strait. Demining takes months. The SPR is a bridge, not a solution — and the bridge only works if the war actually ends. If it doesn’t, the SPR depletes reserves without solving the problem. The Ibovespa’s late pullback from 185,714 to 183,969 is a bearish signal — The index failed to hold the 50-day SMA during the session and gave back 1,745 points in the final hour. This “failed breakout” pattern often precedes a retest of support, especially if the IPCA is hot. IPCA could surprise above +0.80% if transport and fuel costs rose sharply in February — February captured the first week of the war and early oil price increases. If the transport component shows pass-through beyond what consensus expects, the headline could exceed +0.80%, formally putting the 50 bps cut at risk and sending the DI curve steepening. |
Positioning BOTTOM LINE
Thursday is IPCA day — the last data point before the Copom decides next week. The Ibovespa at 183,969 is sitting on the 50-day SMA after three consecutive up days, with RSI above 50 and the MACD turning positive. The setup is constructive but fragile: Wednesday’s failed breakout above 185,000 and the 10Y yield’s 7 bps jump to 4.21% show that headwinds remain.
The positioning call is IPCA-contingent. If IPCA comes in at or below +0.65% MoM (consensus): add rate-sensitive names aggressively — banks, homebuilders, retail — in anticipation of the 50 bps Copom cut. The Ibovespa targets 185,000–186,000. Maintain Petrobras overweight at Brent $87–90. Oracle’s after-hours surge should support Nasdaq-correlated names at the open. If IPCA comes in above +0.80% MoM: reduce equity exposure, particularly rate-sensitives, and wait for the Copom’s guidance. The Ibovespa retests 182,000 and the 50-day SMA becomes resistance instead of support. In either scenario, the 10Y yield at 4.21% is the variable to watch overnight — if it pushes above 4.25%, the DI curve reprices regardless of the IPCA, and the Copom’s freedom narrows. Key events ahead: IPCA today, Adobe earnings tonight, Copom + FOMC next week.