Brazil’s Financial Morning Call for June 19 2025

Brazil’s financial markets are poised for a pivotal session today, shaped by a series of international economic indicators, as domestic markets are closed for the Corpus Christi Day holiday.

The Central Bank of Brazil (BCB) raised the Selic rate to 15% yesterday, a 0.25 percentage point increase aimed at curbing inflation and anchoring expectations, which currently exceed the BCB’s 3% target.

This hike, the highest since 2006, signals a tighter monetary policy to address persistent inflationary pressures and fiscal challenges, including a public debt-to-GDP ratio of 76.2% and a projected 2025 fiscal deficit of R$104 billion.

The move may strengthen the Brazilian real by attracting carry trade interest but risks slowing economic growth by increasing borrowing costs, impacting sectors like real estate and consumer goods.

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With Brazil’s markets closed, international data will dominate investor focus, influencing expectations for commodity demand and currency stability when trading resumes.

Key events include Switzerland’s Trade Balance and SNB Interest Rate Decision, which will signal export dynamics and monetary policy shifts affecting global commodity demand.

The Eurozone’s ECB President Lagarde’s speeches, German Buba President Nagel’s remarks, and Eurogroup Meetings will provide insights into monetary policy and economic health, critical for Brazil’s commodity exports like iron ore and soybeans.

The UK’s BoE Interest Rate Decision and MPC votes will gauge monetary policy direction, impacting demand for Brazilian agricultural goods.

In Asia, Japan’s National Core CPI and China’s PBoC Loan Prime Rate will reflect inflationary pressures and credit conditions, influencing demand for Brazilian metals and agribusiness exports.

These events are crucial as the Ibovespa navigates recent volatility, the Brazilian real firms near R$5.50, and commodity markets face pressures from global trade uncertainties and weak Chinese demand. Today’s data will guide investor sentiment and near-term market trends amid Brazil’s fiscal strains and global policy shifts.

Brazil

• All Day – Holiday: Corpus Christi Day. Markets closed, reducing trading volume and potentially impacting market momentum when trading resumes.

Switzerland

• 02:00 AM EST / 03:00 AM BRT – Trade Balance (May): Actual 3.831B, consensus 5.850B, previous 6.325B. Reflects export-import dynamics, influencing demand for Brazilian commodities.
• 02:28 AM EST / 03:28 AM BRT – SNB Interest Rate Decision (Q2): Actual TBD, consensus 0.00%, previous 0.25%. Signals monetary policy direction, affecting global commodity demand.
• 02:28 AM EST / 03:28 AM BRT – SNB Monetary Policy Assessment: Actual TBD. Provides policy insights, impacting trade sentiment for Brazilian exports.
• 02:58 AM EST / 03:58 AM BRT – SNB Press Conference: Actual TBD. Offers further clarity on monetary policy, influencing capital flows to emerging markets like Brazil.

Norway

• 02:58 AM EST / 03:58 AM BRT – Interest Rate Decision: Actual TBD, consensus 4.50%, previous 4.50%. Tracks monetary policy, impacting demand for Brazilian oil exports.

Eurozone

• 02:28 AM EST / 03:28 AM BRT – ECB President Lagarde Speaks: Actual TBD. Provides monetary policy insights, influencing demand for Brazilian exports.
• 04:30 AM EST / 05:30 AM BRT – German Buba Vice President Buch Speaks: Actual TBD. Offers Bundesbank policy clues, impacting Eurozone demand for Brazilian goods.
• 05:00 AM EST / 06:00 AM BRT – German Buba President Nagel Speaks: Actual TBD. Signals monetary policy direction, affecting trade flows for Brazilian commodities.
• 05:00 AM EST / 06:00 AM BRT – Construction Output (MoM) (Apr): Actual TBD, consensus TBD, previous 0.10%. Tracks construction activity, signaling demand for Brazilian metals.
• 05:45 AM EST / 06:45 AM BRT – ECB’s De Guindos Speaks: Actual TBD. Provides policy insights, influencing trade sentiment for Brazilian exports.
• 06:00 AM EST / 07:00 AM BRT – Eurogroup Meetings: Actual TBD. Discusses economic policy, impacting demand for Brazilian commodities.
• 06:30 AM EST / 07:30 AM BRT – ECB President Lagarde Speaks: Actual TBD. Further shapes monetary policy expectations, critical for Brazilian export demand.

United Kingdom

• 07:00 AM EST / 08:00 AM BRT – BoE MPC Vote Cut (Jun): Actual TBD, consensus 2, previous 7. Signals interest rate cut sentiment, impacting demand for Brazilian goods.
• 07:00 AM EST / 08:00 AM BRT – BoE MPC Vote Hike (Jun): Actual TBD, consensus 0, previous 0. Tracks rate hike sentiment, affecting trade flows.
• 07:00 AM EST / 08:00 AM BRT – BoE MPC Vote Unchanged (Jun): Actual TBD, consensus 7, previous 2. Reflects policy stability, influencing commodity demand.
• 07:00 AM EST / 08:00 AM BRT – BoE Interest Rate Decision (Jun): Actual TBD, consensus 4.25%, previous 4.25%. Guides monetary policy, impacting Brazilian export demand.
• 07:00 AM EST / 08:00 AM BRT – BoE MPC Meeting Minutes: Actual TBD. Provides policy details, shaping trade sentiment for Brazilian goods.

South Korea

• 05:00 PM EST / 06:00 PM BRT – PPI (YoY) (May): Actual TBD, consensus TBD, previous 0.9%. Tracks producer price inflation, signaling demand for Brazilian metals.
• 05:00 PM EST / 06:00 PM BRT – PPI (MoM) (May): Actual TBD, consensus TBD, previous -0.1%. Measures monthly price changes, affecting commodity trade flows.

United Kingdom

• 07:01 PM EST / 08:01 PM BRT – GfK Consumer Confidence (Jun): Actual TBD, consensus -19, previous -20. Gauges consumer sentiment, influencing demand for Brazilian exports.

Japan

• 07:30 PM EST / 08:30 PM BRT – National Core CPI (YoY) (May): Actual TBD, consensus 3.6%, previous 3.5%. Tracks core inflation, impacting demand for Brazilian commodities.
• 07:30 PM EST / 08:30 PM BRT – National CPI (YoY) (May): Actual TBD, consensus TBD, previous 3.6%. Measures overall inflation, affecting trade sentiment.
• 07:30 PM EST / 08:30 PM BRT – National CPI (MoM) (May): Actual TBD, consensus TBD, previous 0.3%. Tracks monthly inflation, signaling commodity demand trends.
• 07:50 PM EST / 08:50 PM BRT – Monetary Policy Meeting Minutes: Actual TBD. Provides policy insights, influencing demand for Brazilian exports.

China

• 09:00 PM EST / 10:00 PM BRT – PBoC Loan Prime Rate (Jun): Actual TBD, consensus 3.50%, previous 3.50%. Signals credit conditions, impacting demand for Brazilian metals and agribusiness exports.
• 09:15 PM EST / 10:15 PM BRT – PBoC Loan Prime Rate: Actual TBD, consensus 3.00%, previous 3.00%. Further guides credit policy, affecting commodity demand.

United States

• All Day – Holiday: Juneteenth. Markets closed, potentially reducing trading volume and impacting global commodity price momentum.

Brazil’s Markets Yesterday

On June 18, 2025, Brazil’s main stock index, the Ibovespa, closed at 138,716.64 points, slipping 0.09%, reflecting cautious investor sentiment ahead of the BCB’s Selic rate decision.

The session’s narrow range was driven by anticipation of monetary policy signals and global economic data. Trading volumes remained robust, supported by B3’s market maker programs, with daily cash equities volume averaging R$27.6 billion, up 11.9% year-on-year.

Sector performance diverged, with Embraer surging nearly 4% on strong order flows and a positive aerospace outlook. Minerva and BRF in the protein sector gained on improved export prospects, while commodity-driven stocks faced pressure from global volatility.

The market’s cautious tone was amplified by fiscal concerns, with the 2025 fiscal deficit projected at R$104 billion and public debt at 76.2% of GDP.

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U.S. Markets Yesterday

U.S. stocks traded quietly on June 18, 2025, as investors blockessed the Federal Reserve’s indication of potential interest rate cuts. The S&P 500 fell 1.85 points, or less than 0.1%, to 5,980.87, staying within 2.8% of its all-time high.

The Dow Jones Industrial Average slipped 44.14 points, or 0.1%, to 42,171.66, while the Nasdaq composite rose 25.18 points, or 0.1%, to 19,546.27. The Russell 2000 index of smaller companies gained 11 points, or 0.5%, to 2,112.96.

Treasury yields held steady after Fed Chair Jerome Powell noted uncertainty around tariff impacts, while oil prices fluctuated amid Middle East tensions. The muted session reflected a wait-and-see approach, with implications for Brazilian commodity exports and currency dynamics.

Commodities

Brazilian Real

The Brazilian real strengthened on June 18, 2025, with USD/BRL closing at R$5.50, down from recent highs, bolstered by the BCB’s Selic rate hike to 15%. Technical ***ysis on the 4-hour chart shows USD/BRL testing support at 5.50, with resistance at 5.55.

The Selic increase enhances carry trade appeal, but fiscal uncertainties, including a R$104 billion deficit forecast, cap gains. Today’s Eurozone ECB President Lagarde’s speeches and UK BoE Interest Rate Decision may introduce volatility.

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Oil Prices

Oil prices held gains on June 18, 2025, with Brent crude trading near $75.50 per barrel, supported by technical strength despite mixed fundamentals.

The stability aids Petrobras and Brazil’s oil export revenues, though global demand concerns persist. Today’s Norway Interest Rate Decision and Eurozone Construction Output will provide demand signals critical for Brazil’s energy sector.

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Gold Prices

Gold faced daily losses on June 18, 2025, trading near $3,400 per troy ounce, as bullish momentum paused amid shifting market sentiment.

The price remains supported by safe-haven demand, benefiting Brazil’s mining sector, including Vale. Today’s ECB President Lagarde’s speeches and German Buba President Nagel’s remarks may influence safe-haven flows.

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Silver Prices

Silver retreated on June 18, 2025, trading at $36.28 per ounce, as technical signals indicated a pause, though a supply deficit supports prices.

This resilience aids Brazil’s mining exports, but momentum is sensitive to global signals. Today’s Eurozone Construction Output and Japan’s National Core CPI will guide industrial metal demand trends.

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Copper Prices

Copper prices slid sharply on June 18, 2025, trading near $4.70 per pound, pressured by surplus forecasts and a technical breakdown.

The decline impacts Vale’s revenues, though Brazil’s commodity exports remain supported. Today’s China PBoC Loan Prime Rate and Eurozone Construction Output will clarify industrial demand outlooks.

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Cryptocurrencies

Bitcoin held steady on June 18, 2025, trading near $106,000, as markets awaited a breakout signal amid technical and macro headwinds.

This resilience supports Brazil’s fintech sector, including Mercado Livre and XP Inc. Today’s UK GfK Consumer Confidence and Japan’s National Core CPI may influence risk appetite and crypto sentiment.

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Iron Ore Prices

Iron ore prices stabilized on June 18, 2025, with the SGX TSI Iron Ore CFR China (62% Fe Fines) Index trading near $93 per ton, after weeks of declines driven by weak Chinese demand.

This impacts Vale’s revenues, though technical support offers relief. Today’s China PBoC Loan Prime Rate and Japan’s National Core CPI will provide commodity demand trends.

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Companies and Market

Industry Outlook

Brazil’s agribusiness sector reached a 22-year high, contributing 27.4% to GDP in 2024, driven by record harvests and high commodity prices, though 2025 faces challenges from high interest rates at 15% and global trade uncertainties.

The Selic rate hike to 15% aims to tame inflation, projected at 5.2% for 2025, but strains fiscal sustainability with public debt at 76.2% of GDP and a R$104 billion fiscal deficit forecast.

Today’s Eurozone Construction Output, Japan’s National Core CPI, and China’s PBoC Loan Prime Rate will shape currency stability and export demand, critical for commodity-driven industries.

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Company Updates

Vale’s Bacaba Copper Project: Vale’s Bacaba copper project in Pará, approved in Q1 2025, targets 60,000 tons of annual copper production by 2028, boosting Brazil’s mining sector.

The $1.1 billion investment supports long-term revenue growth, though current copper price declines pose challenges. Today’s China PBoC Loan Prime Rate and Eurozone Construction Output may influence copper demand sentiment.

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Jalles Machado’s Financial Performance: Jalles Machado reported a R$22.5 million net loss in Q1 2025, despite record sugar output of 1.2 million tons and a 15% revenue increase to R$1.4 billion.

High interest rates at 15% and operational costs weighed on profits, impacting agribusiness sentiment. Today’s UK GfK Consumer Confidence and Japan’s National Core CPI may guide agricultural export demand.

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Explanation of EST

Eastern Standard Time (EST) is the time zone used in the eastern part of the United States, including major cities like New York, Washington, D.C., and Miami. It is UTC-5, meaning it is 5 hours behind Coordinated Universal Time (UTC).

EST is used during the standard time period, typically from early November to mid-March, but in this report, it is applied as requested for consistency. It is the most common U.S. time zone due to its blockociation with key financial and political centers.