Brazil Daily Briefing

The COPOM voted unanimously to cut the Selic rate by 25 basis points to 14.25% on June 17 — the third consecutive cut in this easing cycle. Brazil's central bank confirmed the cut was data-driven, citing manageable domestic inflation and external uncertainty. InfoMoney immediately calculated that even at 14.25%, Brazil's real interest rate remains the highest globally at approximately 9.67% when projected 12-month inflation is subtracted. The COPOM left its forward guidance open-ended — no commitment on the pace of further cuts — which markets interpreted as neutral. Marcus's read: the Selic cut cycle is positive for the domestic economy and for dividend-paying Brazilian equities, but the 9.67% real rate means capital allocation in fixed income (CDI, Tesouro Selic, CDB) remains competitive with equity risk premiums — this is the structural headwind that keeps Brazil's equity risk premium unusually high.

Vale's -2.82% to $15.53 and Gerdau (GGB) -2.81% to $4.49 confirm that the Materials sector's China-demand transmission is the dominant theme for Brazilian miners. Despite Brazil's rate cut — which typically supports infrastructure and construction demand for steel and iron ore — the global risk-off session and specific China property-sector weakness create a direct headwind for Vale's order book. Iron ore prices moved lower on the session alongside the commodity complex. Marcus's read: VALE at $15.53 is already down significantly from highs; the next real catalyst is a China PBOC stimulus signal or property-sector bailout that credibly changes the iron ore demand trajectory. Without that, Vale is an interest rate beneficiary in theory but a commodity demand story in practice.

The US-Iran interim peace memorandum was signed at Versailles on June 17, confirmed simultaneously by InfoMoney, BBC Business, and Financial Times. Under the deal, Iran retains ballistic missiles and Trump pledges to ease sanctions when they 'behave.' The LatAm read is complex: lower geopolitical risk premium on oil reduces energy prices, which is net-negative for Petrobras revenue but net-positive for Brazil's import costs broadly. The deal's complication: Iran's parliament speaker signaled Iran would 'naturally' start charging tolls on Strait of Hormuz shipping per InfoMoney, reintroducing a different kind of oil-price uncertainty. For Brazil, which imports refined petroleum products, a lower oil price floor is directionally positive for the trade balance — but the Hormuz toll story creates a new uncertainty layer that prevents a full geopolitical-relief rally.