Brazil's Financial Morning Call For December 12, 2025

2025-12-12 05:00:34

(MENAFN- The Rio Times) Brazil's financial markets open today with the Ibovespa edging toward fresh highs after a modest 0.07% gain to 159,189 points, supported by foreign inflows chasing Brazil's high-yield appeal despite a split Fed and hawkish Copom hold.

The rally reflects investor bets on the real's strength amid a softer dollar, though noisy politics like Flávio Bolsonaro's 2026 bid and fiscal drift cap enthusiasm.

At the same time, November's IPCA inflation cooled to a seven-year low of 0.18% MoM and 4.46% YoY, landing firmly inside the 1.5%–4.5% target band for the first time in years.

This outcome validates Copom's contractionary Selic stance at 15% for a“prolonged period” to anchor expectations, despite sticky services inflation and external tariff risks.

This softer print, down from 4.83% for all of 2024, eases pressure on borrowers but underscores the need for fiscal discipline amid debt nearing 89% of GDP.

Meanwhile, a new Senate-approved bill turns online bettors into crime-fighting funders by taxing 15% on deposits to licensed sites. The measure could yield R$30 billion annually for police operations, intelligence efforts, and prison expansions.

It aims to squeeze gangs through harsher sentences and federal prison transfers. Critics, however, warn of black-market growth in an already overtaxed economy.

Sticky services inflation, São Paulo's industrial plunge of 1.2% in October, and the farm sector's tepid 1% agribusiness GDP outlook for 2026 amid 11.4% credit delinquencies add headwinds, even as robust foreign inflows and copper tailwinds cushion liquidity.

The real rallied 1.17% to R$5.40, bolstered by Copom's hawkish hold offsetting the Fed's third 0.25-point cut to 3.50%–3.75% and a dollar index slip toward 98, though USD/BRL eyes resistance at 5.52 with support at 5.35–5.38.
Economic Agenda for December 12, 2025
Times in BRT (Brasília Time)
Brazil

12:00 PM BRT – Brazilian Service Sector Growth (MoM) (Oct) Prev: 0.6%
12:00 PM BRT – Brazilian Service Sector Growth (YoY) (Oct) Prev: 4.1%
Implication: A slowdown in services growth could highlight persistent high real rates from the 15% Selic and credit strains, reinforcing Copom's hawkish bias amid November's cooling IPCA at 4.46% YoY and amplifying pressures on consumption amid farm delinquencies and industrial fragmentation.

Mexico

All Day – Bank Holiday
12:00 PM BRT – Industrial Production (YoY) (Oct) Cons: -2.4% Prev: -2.4%
12:00 PM BRT – Industrial Production (MoM) (Oct) Cons: 0.0% Prev: -0.4%
Implication: Stagnant industrial output on a holiday backdrop tests Banxico's resilience at 7.25%, supporting MXN near 18.02/USD but vulnerable to U.S. tariff risks and softer nearshoring flows if output misses signal broader slowdowns.

United States

01:15 AM BRT – President Trump Speaks
15:35 PM BRT – Fed Goolsbee Speaks
18:00 PM BRT – Baker Hughes Oil Rig Count Prev: 413
18:00 PM BRT – Baker Hughes Total Rig Count Prev: 549
Implication: Trump's speech and Fed comments gauge post-cut policy tone, with rig stability signaling energy softening, easing yields and aiding BRL inflows via dollar weakness near 98 DXY.

United Kingdom

07:00 AM BRT – GDP (MoM) (Oct) Cons: 0.1% Prev: -0.1%
07:00 AM BRT – Industrial Production (MoM) (Oct) Cons: 0.9% Prev: -2.0%
07:00 AM BRT – Construction Output (MoM) (Oct) Cons: -0.1% Prev: 0.2%
Implication: Weaker GDP and construction could boost BoE cut odds, weakening GBP and favoring BRL carry trades amid global easing bias.

Why These Events Matter: Brazil' Service Sector Growth at 12:00 PM is pivotal, with prior 0.6% MoM and 4.1% YoY readings at risk of contraction amid 15% Selic-induced credit squeezes and October's fragmented industrial recovery.

Such softness would validate Copom's“higher for longer” path despite IPCA's seven-year November low at 0.18% MoM/4.46% YoY, emphasizing fiscal restraint to avoid debt shocks near 89% of GDP and curb farm sector risks like 11.4% delinquencies curbing 2026's 1% agribusiness outlook.

The data could temper Ibovespa gains near 159,189 if it underscores broader momentum loss tied to manufacturing hubs 22.8% below 2011 peaks and extraction skews in states like Minas Gerais (+2.1%).

Mexico's Industrial Production tests nearshoring strength on a bank holiday, with U.S. events probing Fed patience post-cut, potentially softening dollar tailwinds for LatAm; U.K. GDP adds easing signals.
Brazil's Markets Yesterday
The Ibovesp edged higher by 0.07% to 159,189 points, hovering just below 160,000 as Wall Street records and a split Fed decision buoyed sentiment.

Foreign inflows lifted Vale (+1.3%), banks like BTG Pactual (+2.5%), and domestic plays such as Hapvida (+3.4%), RD Saúde (+3.2%), and Vivara (+2.7%), while Petrobras (-2%) and Suzano (-4.3%) weighed on the index after weak guidance and retreating Brent.

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U.S. Markets Yesterday
U.S. markets closed mixed on December 11, 2025, with the Dow Jones Industrial Average up 1.3% to a record 48,704.01, the S&P 500 rising 0.2% to a new record 6,901.00, and the Nasdaq Composite falling 0.3% to 23,593.86 as Oracle's weak results and AI spending plans dragged tech. The Russell 2000 gained 1.2%.

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Mexico's Market Yesterday
The Mexican peso strengthened to 18.02 per dollar. The S&P/BMV IPC rallied over 2% to a record 64,712 points. Winners: Grupo Aeroportuario del Pacífico (+6.0%), Orbia (+5.3%), Grupo Aeroportuario del Centro Norte (+5.0%), Kimberly-Clark de México (+3.8%), Cemex (+3.4%).

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Argentina's Market Yesterday
The Argentine peso held steady with wholesale near 1,436. The Merval slipped 1.1% to 2.98 million points, consolidating near records on debt optimism but facing profit-taking.

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Colombia's Market Yesterday
The Colombian peso firmed to spot 3,803/USD. The COLCAP eased 0.26% to 2,114.21 after a 50% YTD rally.

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Chile's Market Yesterday
The Chilean peso surged to 914/USD. The IPSA jumped 1.9% to a record 10,362.9, up 54% YTD.

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Commodities
Brazilian Real
The real rallied 1.17% to R$5.40 as Copom's hawkish 15% Selic hold met the Fed's softer cut, reviving carry trades. USD/BRL consolidates with support at 5.35–5.38 and resistance below 5.52.

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Cryptocurrencies
Bitcoin stalled below $92,000 resistance after failing a four-hour moving average break; long-term uptrend holds but fragility shows in thinner liquidity.

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Companies and Market
Industry Outlook
Brazil's recovery falters as São Paulo's industrial output drops 1.2% in October (cumulative -1.7%, 22.8% below 2011 peak), dragging national growth to +0.1%.

Growth skews to extraction states like Minas Gerais (+2.1%) and Rio de Janeiro (+4.1%). The farm sector eyes 1% GDP growth for 2026 despite R$1.57 trillion output (+5.1%), hampered by 11.4% delinquencies.
Key Developments

Inflation cools to 4.46% YoY inside target for first time in years, but services stickiness sustains Copom's 15% Selic“higher for longer.”

Senate bill taxes online betting deposits 15% (R$30B/year) to fund anti-gang ops, harsher sentences, and prisons.

São Paulo industry -1.2% MoM, national +0.1%, signaling fragmented recovery loss.
Farm agribusiness GDP barely +1% in 2026 amid 11.4% delinquencies and credit rationing.
Flávio Bolsonaro's 2026 bid adds policy noise. Copom holds Selic at 15% with contractionary bias for prolonged period.

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