Turim Insights

The April edition of Visão Turim brought together Fernando Verboonen (Partner and CIO), Henrique Santos, CFA (Partner and Head Portfolio Manager), and Pedro Hokama (Partner and Head of Liquid Assets) to discuss recent developments in the global landscape, key geopolitical risk drivers, the dynamics of the Brazilian economy, and the most relevant market movements.

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• Global scenario: The escalation of tensions in the Middle East and the consequent closure of the Strait of Hormuz led to a sharp surge in energy prices worldwide. Expectations surrounding the conflict dominated market dynamics throughout the month, showing clearer signs of moderation only this Wednesday, following the announcement of plans for a ceasefire.

• Monetary Policy: The oil shock triggered a significant repricing in global interest rate markets, reversing expectations of rate cuts and, in many cases, even anticipating a resumption of tightening cycles. This movement was particularly notable in countries more dependent on energy imports, such as European economies and Asian emerging markets.

• Exchange Rate: The US dollar appreciated again during the month, in contrast to last year’s trend, when the risk-off environment driven by Rates led to a sharp depreciation of the currency. However, it remains challenging to assess how much of this movement reflects a “flight to quality” versus a terms-of-trade shock, given that the US is a net oil exporter.

• Brazil: Despite the shock, flows into the Brazilian market remained resilient throughout the month, diverging from the reversal observed across a broader set of emerging markets. Part of this movement may be associated with the country’s “privileged” position, whether due to its strong energy production capacity or its geographic and diplomatic distance from the conflict.