Brazil Daily Briefing

XP dropped $1.26 to $17.29, the steepest fall in today's LatAm universe, dragging the entire Fintech sector down 5.1%. The selloff looks like a combination of rising long-end BRL rates making fixed-income alternatives more attractive versus XP's wealth/brokerage model, and broader risk-off pressure. With Brazil fixed income now offering 14%+ on CDBs — as highlighted in local market analysis — XP's fee-based flows face structural headwinds heading into Q2 earnings.

PBR and PBR.A fell 4.4% and 4.7% respectively, with PBR.A closing at $17.77 — a level that puts the preferred shares at a notable discount to recent trading ranges. Brent softness compounded by BRL weakness is squeezing the local reais-denominated earnings outlook, and dividend policy uncertainty under the current government adds another discount layer. Watch Thursday's oil print: if Brent holds below $78, Petrobras has no fundamental catalyst to reverse this.

Local Brazilian fixed-income desks are actively recommending 14%-yielding CDBs in May, which tells you exactly where the market thinks Selic is going — nowhere down, fast. The BCB's Copom has held Selic at 13.75%+ territory, and with inflation expectations still unanchored above target, the rate cut narrative is being pushed further out. This dynamic is the structural headwind behind today's equity bloodbath: at 14% risk-free in reais, equity risk premium compression reverses hard.