Copom: market now expects Selic to be maintained at the 1st meeting after elections
According to Exame, the majority expectation is for Selic to be maintained at 13.75% in Wednesday's decision (4), and B3's options indicate a 68.86% chance of maintenance.
BY THE X-TRADER NEWS NEWSROOM · REPORTING FROM EXAME · 2 MIN
The financial market changed its bet before the Copom's first decision after the election. According to Exame, the majority expectation is now for the Selic to remain at 13.75%, and the scenario of new cuts has lost strength among analysts.
The meeting takes place on Tuesday (3) and ends on Wednesday (4). Based on the options traded on B3, there is a 68.86% chance that the rate will remain as it is. Itaú and Warren project stability, while Inter is still betting on a 0.25 percentage point cut.
The consensus, however, is not unanimous. Broadcast Projections survey, by Estadão, with 75 institutions, shows 39 projecting a cut of 0.25 percentage points and 36 projecting maintenance at 13.75%. The division makes it clear that Wednesday's decision is not ruled out for either side.
The backdrop is the re-election of Lula (PT). According to Money Times, the Focus Report underwent revisions after the result. In the same week, according to InfoMoney, the Stock Exchange had the worst weekly drop since March 2020, the dollar rose and future interest rates soared. Ibovespa resumes trading in the first trading session of November, after the All Souls' Day holiday.
Outside, the scenery also comes into play. Money Times reminds us that the US has midterm elections and that employment data arrives before the October payroll. The next Copom meeting is scheduled for December 8th and 9th, and, according to Estadão, the market expects Selic at 13.75% by the end of the year. For InfoMoney, the hypothesis that the cycle of cuts ends at this level is precisely the central point of this week's decision.
What changes for the investor
If the Copom keeps the Selic at 13.75%, the discussion stops being when the cuts start and becomes how long interest rates remain high. For those who follow the stock market, Nasdaq and the dollar, this scenario tends to weigh on companies' cost of capital and the attractiveness of variable income assets compared to fixed income. A cut, even if small, would signal the beginning of a path of lower interest rates. It is worth following the Central Bank's communication on Wednesday and the next revisions of the Focus Report, because these are the ones that show whether the market is adjusting its bets.
Automatically translated from Portuguese.
