The Morning After
Today’s Brazil’s Financial Morning Call unpacks the most consequential Super Wednesday in years. This is part of The Rio Times’ daily Brazil Financial Morning Call, covering Latin American financial markets.
The Copom delivered exactly what the market expected: a unanimous 25 bps cut to 14.75% — the first reduction in nearly two years. The forward guidance was left deliberately open, with no committed pace. The BCB flagged the Middle East conflict as the key variable shaping future decisions and raised its 2026 inflation projection from 3.4% to 3.9%.
The FOMC also delivered as expected — holding at 3.50–3.75% — but the market hated the details. The dot plot kept one cut for 2026 (unchanged from December), but Powell’s press conference spooked markets. He flagged that higher energy prices “will push up overall inflation” and that the “bar is a little bit higher for cutting rates.” Traders began pricing zero cuts for 2026 by the end of the session.
The damage was severe. The Dow plunged 768 points (−1.63%) to a new 2026 low at 46,225. The S&P 500 fell 1.36% to 6,625 — its worst Fed-day since December 2024. The Nasdaq sank 1.46%. Selling accelerated during Powell’s remarks and intensified after a scorching PPI report earlier in the day: wholesale inflation surged +0.7% MoM, more than doubling the +0.3% consensus.
The Ibovespa closed before the worst of the US selloff at 179,639.91 (−0.43%), but faces a sharply negative open this morning given Wall Street’s losses. The Copom’s 25 bps cut is mildly positive domestically, but the hawkish global backdrop — Powell’s inflation warning, zero cuts priced for the Fed, and Brent near $104 — dominates the setup.
Three Things That Matter
| Tuesday | Ibovespa +0.30% to 180,410. USD/BRL R$5.20 (−0.57%). Brent +3.20% to $103.42. Iran struck UAE (Dubai, Fujairah, Shah gas field). Israel hit Tehran, killed Ali Larijani. Copom Day 1. S&P 500 +0.25%. Focus: Selic end-2026 at 12.25%. Trucker strike speculation lifted DIs |
| Wednesday | SUPER WEDNESDAY: Ibovespa −0.43% to 179,640. USD/BRL R$5.24. US PPI shocked at +0.7% MoM (cons: +0.3%). Fed held 3.50-3.75%, 1 cut projected (unchanged), but raised inflation to 2.7%. Powell: “bar is higher for cuts.” Dow −768 pts (−1.63%), S&P −1.36%, Nasdaq −1.46%. Copom cut 25 bps to 14.75%, unanimous, open guidance. Brent ~$104. Gold −1.0% to $4,770. DXY +0.5% to ~100 |
| Today | Post-decision digestion. BoE rate decision (08:00 ET, cons: hold 3.75%). ECB rate decision (09:15 ET, cons: hold 2.15%). Philly Fed Mfg (08:30 ET, cons: 8.3). Jobless Claims (08:30 ET, cons: 215K). New Home Sales (10:00 ET). ECB press conference (09:45 ET). War Day 20. BoJ held overnight at 0.75% |
Where We Left Off WEDNESDAY, MAR 18 — B3 CLOSE + AFTER-HOURS
The Ibovespa closed at 179,639.91 (−0.43%), oscillating between 181,551 (high) and 179,576 (low) in a session dominated by pre-decision caution. The index was already under pressure before the FOMC after US PPI shocked at +0.7% MoM — more than double consensus — confirming that inflation was accelerating even before the Iran oil shock hit.
After the B3 close, two events reshaped the outlook. The FOMC held rates as expected, but Powell’s tone was hawkish: inflation projections rose to 2.7% (from 2.4%), GDP growth was revised up to 2.4%, and the “bar for cutting rates” was raised. The Dow crashed 768 points — its worst day since the war began — with selling intensifying during the press conference.
Then the Copom cut 25 bps to 14.75%, as expected. The decision was unanimous. The statement left forward guidance open — no committed pace — and flagged the Middle East conflict as the dominant uncertainty. The BCB raised its 2026 inflation projection from 3.4% to 3.9%. As covered in yesterday’s Morning Call, the 25 bps cut was fully priced, so the domestic reaction hinges on the open guidance language and how the global selloff spills into B3.
Market Snapshot DATA AS OF WED, MAR 18 CLOSE
| Indicator | Close | Change |
|---|---|---|
| Ibovespa | 179,640 | −0.43% |
| USD/BRL | R$5.24 | +0.77% |
| S&P 500 | 6,625 | −1.36% |
| Nasdaq | 22,152 | −1.46% |
| 10Y Treasury | ~4.22% | −2 bps |
| Gold (Spot) | $4,770 | −1.00% |
| Brent Crude | ~$104 | +0.6% |
| Iron Ore (62%) | ~$102 | ~flat |
| DXY | ~100.0 | +0.50% |
What to Watch THURSDAY CATALYSTS
Thursday is digestion day — and the global backdrop is ugly. The Ibovespa opens into a Dow that lost 768 points and an S&P that broke to new 2026 lows. The Copom’s 25 bps cut and open guidance provide mild domestic support, but cannot offset a hawkish Fed and scorching US inflation data.
Two more central banks decide today. The Bank of England at 08:00 ET (cons: hold 3.75%) matters for global rate sentiment — if the BoE sounds hawkish, it reinforces the “higher for longer” narrative. The ECB at 09:15 ET (cons: hold 2.15%) with Lagarde’s press conference at 09:45 ET provides the European view on the oil shock.
US data includes Initial Jobless Claims (08:30 ET, cons: 215K), the Philly Fed Manufacturing Index (08:30 ET, cons: 8.3, prev: 16.3), and New Home Sales (10:00 ET, cons: 722K). The Philly Fed matters most: a sharp decline from 16.3 would confirm the US manufacturing slowdown that the hot PPI is making more painful.
Overnight, the BoJ held at 0.75% as expected. War Day 20 — the conflict continues with no ceasefire progress despite the diplomatic signals earlier this week.
Ibovespa Setup TECHNICAL LEVELS
The Ibovespa closed Wednesday at 179,639.91 (−0.43%). Daily RSI reads 45.28 (MA: 48.95) — neutral territory, but fading. The MACD histogram remains deeply negative at −1,137.77 (MACD: 613.85, signal: −523.91), confirming bearish momentum persists.
Resistance: 179,640 (Wednesday’s close) → 180,507 (intermediate SMA) → 181,518 (50-day SMA) → 183,245 (upper Bollinger).
Support: 179,409 (lower SMA) → 176,341 (lower Bollinger) → 175,232 (200-day SMA) → 153,330 (long-term SMA).
The open will gap down to reflect the US selloff. Expect the index near 177,000–178,500 at the open. The 200-day SMA at ~175,232 is the critical floor — now just ~4,400 points below Wednesday’s close, but potentially only ~2,000–3,000 points below the opening print.
The Copom’s cut provides a domestic offset: the start of the easing cycle is structurally positive for equities. But the open guidance (no committed pace, war-dependent) limits the relief. If the B3 stabilizes above 177,000 by mid-morning, the Copom cut anchors sentiment. If it breaks below 176,341 (lower Bollinger), the 200-day SMA test becomes imminent. Bias: defensive, buy the dip only near the 200-day SMA.
Copom Watch DECISION DELIVERED · SELIC AT 14.75%
The BCB cut 25 bps to 14.75%. The vote was unanimous among seven directors — two seats remain vacant after mandates expired in late 2025.
The statement’s key line: the Copom “julgou apropriado dar início ao ciclo de calibração da política monetária” — judged it appropriate to begin the calibration cycle. It explicitly left future moves open, stating that “adjustments in the pace of this calibration, in light of new information, are possible.”
The BCB raised its 2026 inflation projection from 3.4% to 3.9% — approaching the 4.5% ceiling. The statement cited the Middle East conflict as the source of “considerably elevated uncertainty” and warned that inflation projections show “additional distancing from the target.”
The market read: the easing cycle has begun, but the pace is entirely war-dependent. A second 25 bps cut in May is the base case if oil stays near $100–105. If Brent breaks to $110+, a pause is on the table. The DI curve will reprice this morning alongside the US selloff.
Economic Calendar THURSDAY, MAR 19
| Time | Event | Impact |
|---|---|---|
| All Day | Iran-US War Day 20. Post-Super Wednesday digestion: Copom cut to 14.75%, Fed held, Powell hawkish, PPI shocked. BoJ held at 0.75% overnight. S&P futures indicate sharp gap down. Dow at 2026 low | HIGH |
| 08:00 ET | BoE Interest Rate Decision — Cons: hold 3.75%. Vote split cons: 7 hold / 2 cut / 0 hike. MPC minutes. UK labor market resilient (employment +84K vs −4K cons) | MEDIUM |
| 08:30 ET | US Initial Jobless Claims — Cons: 215K (prev: 213K). Philly Fed Manufacturing (Mar) — Cons: 8.3 (prev: 16.3). Watch Philly Fed prices paid for post-PPI inflation signal | HIGH |
| 09:15 ET | ECB Interest Rate Decision — Cons: hold 2.15%. Deposit Facility Rate cons: 2.00%. Lagarde press conference at 09:45 ET. European view on the oil shock and inflation | MEDIUM |
| 10:00 ET | US New Home Sales (Jan) — Cons: 722K (prev: 745K). Leading Index (Jan) cons: −0.1%. Housing data under pressure from rising mortgage rates | LOW |
| 21:00 ET | PBoC Loan Prime Rate (Mar) — Cons: hold 3.00% (1Y) / 3.50% (5Y). China monetary stance amid global tightening | LOW |
Latin America Markets WEDNESDAY CLOSE
| Index | Close | Change | RSI (14) | Signal |
|---|---|---|---|---|
| Ibovespa | 179,640 | −0.43% | 45.28 | Neutral |
| IPC (Mexico) | 65,779 | −0.63% | 36.27 | Oversold |
| COLCAP (Colombia) | 2,179 | −0.25% | 38.92 | OS Watch |
| IPSA (Chile) | 10,620 | −0.01% | 40.18 | Neutral |
| MERVAL (Argentina) | 2,693,891 | +1.16% | 37.90 | Oversold |
Wednesday’s LatAm session closed before the worst of the US carnage. The Ibovespa (−0.43%), IPC (−0.63%), COLCAP (−0.25%), and IPSA (−0.01%) all posted modest declines on pre-decision caution. The MERVAL was the outlier at +1.16%, continuing its short-covering bounce.
The IPC at RSI 36.27 is now the most oversold index in the region — its lowest reading since the war began. COLCAP at 38.92 is approaching extreme levels. The Ibovespa at 45.28 has room to fall further before hitting oversold territory. All five indices face significant gap-down risk this morning from the US selloff.
The MACD picture remains uniformly negative. The IPC’s histogram at −947.45 deepened further, and the MERVAL’s at −80,857.63 shows the bounce is still counter-trend. Today’s price action will determine whether the Copom cut provides enough domestic offset to prevent a full capitulation in the Ibovespa.
Commodities & FX KEY MOVES
Brent rose to ~$104, with Bloomberg reporting prices reaching ~$111 during the session after Iran said energy facilities came under attack. WTI traded near $98. The PPI’s +0.7% MoM reading confirmed that wholesale inflation is running hot even before the March oil spike fully hits the data.
Gold fell sharply to $4,770 (−1.00%), breaking well below the $5,000 level that held since the war began. The selloff accelerated after Powell’s hawkish tone strengthened the dollar and pushed real yields higher. Silver crashed 3.9% to $72.43. The precious metals rout signals that inflation fear is being replaced by rate-fear — a worse dynamic for risk assets.
USD/BRL rose to R$5.24 (+0.77%), reversing the prior two sessions’ declines as the hawkish Fed pushed the dollar higher globally. The Copom’s 25 bps cut adds modest downward pressure on the real through reduced carry, but the 14.75% Selic still offers an enormous yield differential. The real’s direction today depends on the DI curve’s reaction to the Copom statement.
DXY rose ~0.50% to ~100.0, reclaiming the key psychological level after Powell’s hawkish press conference. If the dollar holds above 100, it adds pressure to EM currencies and equities across the board.
Bitcoin fell 1.15% to $70,439, tracking the broader risk-off move. The crypto market is trading as a leveraged beta to equities in this environment.
Risk Map BULL vs BEAR
| Bull Case | Bear Case |
|---|---|
| The easing cycle has officially begun — The first rate cut in nearly two years is structurally positive for Brazilian equities. Even at 25 bps, it signals the BCB believes inflation is on a convergent path. The open guidance gives the market something to look forward to at every meeting.
The Fed’s dot plot actually kept one cut for 2026 — The headline was less hawkish than feared. The market panicked on Powell’s tone, but the median projection didn’t change. If oil stabilizes or declines, the September cut window reopens and the selloff reverses. LatAm oversold readings are at extremes — IPC at RSI 36.27, COLCAP at 38.92, MERVAL at 37.90. These are capitulation-level readings. Any de-escalation headline, oil pullback, or dovish ECB/BoE today could trigger violent short-covering. R$45 billion in foreign flows year-to-date provides a floor — Despite the volatility, foreign capital continues flowing into Brazilian equities. The carry trade remains attractive at 14.75% Selic. This structural bid limits downside on selloffs. |
The PPI shock changes everything — February PPI at +0.7% MoM was the hottest reading in a year, and this was BEFORE the March oil spike hits the data. If March PPI confirms the trend, the Fed’s “one cut” becomes “zero cuts” officially. The entire 2026 rate path reprices higher.
Gold’s break below $5,000 signals a regime shift — Gold falling during a war while inflation is surging is not normal. It means rising real yields and dollar strength are overpowering the safe-haven bid. This tightening of financial conditions hits EM assets hardest. The Copom’s open guidance is a double-edged sword — No committed pace means the market must reprice the easing cycle at every data release and every oil move. If Brent pushes to $110, the May meeting could be a pause — and the DI curve would price that scenario aggressively. The Dow at a 2026 low below its 200-day SMA is a technical breakdown — With the Dow closing below its 200-day MA for the first time this year, and the Ibovespa facing a significant gap down, the risk of a broader capitulation in global equities is rising. The Ibovespa’s 200-day SMA at ~175,232 could be tested today. |
Positioning BOTTOM LINE
The morning after Super Wednesday is brutal for global equities. The Dow lost 768 points, the S&P broke to 2026 lows, PPI shocked at +0.7%, and Powell raised the bar for cuts. The Ibovespa opens into this carnage with a mild domestic offset: the Copom’s first cut in two years.
The positioning call is defensive with selective buying near support. Do not catch the falling knife at the open — let the gap-down price discovery run until 11:00 BRT. If the Ibovespa stabilizes near 177,000–178,000, the Copom cut provides a base for accumulating Petrobras and banks at a discount.
If the index breaks below 176,341 (lower Bollinger), shift to full defense and wait for the 200-day SMA at ~175,232. A test of the 200-day is the buying opportunity of the war period — but only if it holds. As tracked in our Ibovespa market reports, a close below the 200-day would confirm the medium-term trend break.
The Nasdaq‘s 1.46% drop adds tech pressure. Watch BoE and ECB decisions for global rate sentiment. The key question for today: does the Copom cut matter more than Powell’s hawkishness? The DI curve at the open will answer.
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.