Turim Insights

The July edition of Visão Turim brought together Henrique Santos (Partner and Head Portfolio Manager), João Mello (Portfolio Manager), and Lucas Panaro (Head of Liquid Funds) to discuss recent developments in the global landscape, the latest monetary policy developments across major economies, the impact of artificial intelligence on inflation and financial markets, and the main challenges facing the Brazilian economy.

Highlights:

• Global outlook: Despite ongoing geopolitical volatility, the economic impact of the conflict has remained relatively limited so far. Oil prices have retraced most of their recent gains, while fertilizers and other agricultural inputs continue to put upward pressure on the global inflation outlook.

• United States: The combination of still-elevated inflation, partly driven by investments in artificial intelligence, and a resilient labor market has led markets to price in a more restrictive interest rate path. At the same time, the new Fed Chair’s communication style has increased uncertainty regarding the future direction of monetary policy.

• Brazil: Labor market data have shown signs of easing at the margin and, if this trend continues, could pave the way for further interest rate cuts. Nevertheless, the Central Bank’s recent communication, quasi-fiscal measures, and the approaching election cycle continue to contribute to a more uncertain macroeconomic environment.

• Private Credit: The environment remains challenging for higher-risk credit, given the still-elevated cost of capital and increased investor selectivity. In this context, rigorous credit analysis has become even more important, particularly in segments characterized by greater asymmetry and lower liquidity.