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Local Assets Struggle

BRAZIL

Local assets struggled yesterday as markets digested the current situation in Brazil. The potentially hawkish removal of the forward guidance from the central bank shifted the local swap rates curve higher. Moves were extended amid ongoing fears that fiscal aids will be imminently necessary to counter the threat of the second wave of the pandemic. Additionally, there are fears over vaccination logistics and timelines creating further headwinds for local assets.


IBOVESPA was down 1.01% and the currency after opening 1% higher, sharply fell with the increasing pessimism. The rapid depreciation wasn't enough to prompt central bank intervention, however, a move today amid broad risk-off sentiment cannot be ruled out.

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