Turim’s Insights

A monthly conversation with our team about markets and strategies

05 April 2023

The global stress in the banking sector, as well as the flight of deposits in American commercial banks were highlights of the April Turim’s insights webinar. One year after the start of the process of raising interest rates in the United States, we saw large banks such as Silicon Valley Bank and Signature Bank declare bankruptcy. These events led a number of monetary authorities to implement measures to ensure the financial stability of their economies.

According to our partner and strategist Nelson Abrahao, the concern caused by these events accelerated the deposit redemption movement. However, this process had already been taking place since the beginning of the interest rate hike cycle. He argues that “interest rates rose very quickly, but deposit rates did not follow, opening a relevant spread between the profitability of fixed income and deposits”, which generated a significant flow to money market funds.

In Brazil, the highlight was the disclosure of the proposal prepared by the Ministry of Finance for the new fiscal framework. In general terms, the disclosure was positive, mainly for eliminating the risk of announcing an incoherent proposal. However, it is known that the new proposal has its reservations and assumes commitments, in principle, incompatible with the stabilization of the debt/GDP ratio until 2026.

The webinar also had the participation of Eduardo Gomes de Almeida, co-CEO of Turim; Henrique Santos, CFA, portfolio manager; and Lucas Panaro, fund analyst at Turim UK.