Turim Insights

The September edition of Visão Turim brought together Fernando Verboonen (Partner and Co-CIO), Guilherme Ferraioli (Partner and Co-CIO), Henrique Santos (Partner and Head Portfolio Manager), and Carolina Assis (Head of Illiquid Investments) to discuss developments in the global landscape, the latest inflation and activity data in the United States, monetary policy developments, and the main challenges facing the Brazilian economy as the elections approach.

Highlights:

• Global scenario: The strong cycle of investment in artificial intelligence continues to support growth, with accelerating revenues and earnings among companies linked to the sector. At the same time, the significant increase in infrastructure investment and growing financing needs are creating new risks related to energy supply, regulation, and the ability to monetize these investments.

• United States: Inflation and labor market data continue to point to a gradual easing of inflationary pressures, despite the surprise in the latest Payroll report. However, convergence toward the target remains slow. Against this backdrop, Fed communication remains in focus, with markets pricing in around a 60% probability of another rate hike as early as this month, although a prolonged tightening cycle is not expected.

• Brazil: Household consumption has been showing clearer signs of slowing amid elevated interest rates, preliminary signs of moderation in household income growth, and greater pressure on household budgets. This movement reinforces the impact of monetary policy on economic activity, but fiscal risks and the possibility of additional stimulus continue to limit the scope for more significant interest rate cuts.

• Global markets: Following the sharp correction observed in July, assets linked to artificial intelligence and semiconductors saw a more limited recovery in August. At the same time, elevated fiscal deficits, increased government bond issuance, and new debt issuance by technology companies continue to put pressure on long-term yield curves across major economies.

• Local markets: Recent developments in election polls already appear to be having some impact on the equity market, helping to explain the recovery observed since the second half of August. The resilience of the Brazilian real also stands out, with the currency maintaining low volatility and remaining at relatively appreciated levels despite the approaching election period.