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The stock market retreated and the dollar rose to R$4.9081 and investors look to the United States

Global financial markets started the week with a slightly negative trend. This Monday (13) the stock market closed with a decline and the dollar rose.

Investors are awaiting inflation data from the United States, which will be released on Tuesday (14), while Moody’s downgraded the country’s credit rating from “stable” to “negative” last Friday (10).

The measure comes after another risk rating agency Fitch downgraded the US sovereign rating this year in the wake of months of political debate over the US debt ceiling.

In its justification, Moody’s cited the large fiscal deficit and declining debt repayment capacity as risks to the US economy, factors that helped raise interest rates on Treasuries (US Treasury bonds) last month.

However, what put the most pressure on US fixed income profitability was the expectation that the country’s key interest rates would remain at high levels for a long time. It is at its highest level since 2001, between 5.25% and 5.50%. The market expects it to start declining in mid-2024.

Tomorrow’s October inflation may indicate when this cycle of monetary tightening will end. Prices are forecast to fall by 3.7% to 3.3% in September. However, core inflation is expected to remain unchanged from the previous month.

On Wall Street, stock indexes had a mixed performance. The S&P 500 and Nasdaq declined 0.08% and 0.22%, respectively. The Dow Jones rose 0.16%.

Here, Ibovespa fell 0.14% to 120,398 points. Over the past three weeks, the main index of the Brazilian Stock Exchange increased by 6.55%.

The commercial dollar closed at R$4.9081, up a modest 0.13%.
In general, the higher US interest rates go, the more the dollar benefits globally, as investors begin to show more interest in the extremely safe US fixed income market.

Meanwhile, investors are keeping an eye on fiscal risks amid talk of changing Brazil’s deficit target to 2024.

“The main discussion now is not whether the target will be changed, but by how much,” analysts at Guide Investimentos said in a note to clients.


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