Financial Roundup 03/30: Inflation in Focus and New US Banking Rules

Financial markets close out the last Monday of March under a double layer of pressure: in Brazil, inflation expectations rise for the third consecutive week, driven by oil surging above $100 per barrel amid the conflict in the Middle East. In the United States, the Federal Reserve signals structural changes for the banking sector, while Wall Street moves cautiously against the geopolitical backdrop.

1. Focus Report: Rising Inflation and a More Cautious Rate Path

Brazil’s Central Bank released today’s Focus Report, revealing a new round of revisions to macroeconomic expectations for 2026.

  • IPCA: The inflation forecast for this year climbed for the third consecutive week, from 4.17% to 4.31% — a significant jump compared to four weeks ago, when the estimate stood at 3.91%. Inflation is now approaching the 4.50% target ceiling, sitting just 0.19 percentage points below the limit. For 2027, the forecast edged up from 3.80% to 3.84%.
  • Selic: The median forecast for Brazil’s benchmark rate at year-end 2026 stabilised at 12.50%, after three consecutive weeks of upward revisions. Markets scaled back expectations for the April Copom meeting: consensus now points to a cut of just 0.25 percentage points, bringing the Selic from 14.75% to 14.50% — reversing earlier bets on a more aggressive easing move.
  • GDP and Exchange Rate: The growth estimate for 2026 inched up to 1.85%. The year-end dollar forecast was held steady at BRL 5.40.

2. United States: Fed Proposes Capital Rule Relief

The Federal Reserve announced proposals to ease capital requirements for large US banks, aiming to expand credit availability.

  • Mortgage Lending: The proposal suggests removing the requirement to deduct mortgage servicing assets from capital, applying a 250% risk weight instead.
  • Resilience: Even with the reductions, the largest US banks would still hold over $800 billion in capital, maintaining stability well above pre-2008 levels.

3. Market Moves (Close 03/30)

The day’s backdrop was the war in the Middle East: with Brent crude holding above $100 per barrel, commodity-linked assets supported Brazil’s stock exchange, while risk sentiment weighed on Wall Street. 10-year Treasury yields reached 4.44%, the highest level in eight months.

  • Ibovespa: Closed up 0.53% at 182,514 points, supported by Petrobras (PETR4, +0.53%) and Vale (VALE3, +0.63%). For the month, the index is down around 3.83%, but still carries a gain of roughly 12% year-to-date.
  • Commercial Dollar: Posted a modest gain of 0.12%, closing at BRL 5.24 — pressured by the external risk environment despite a brief geopolitical respite early in the session.
  • S&P 500: The US index declined 0.39%, reflecting caution over the inflationary outlook and a drop in consumer confidence.

4. News Briefs

  • Consumer Confidence (US): The University of Michigan index fell to 53.3 in March, its lowest level in over two years. The decline reflects growing pessimism among American consumers about near-term inflation, compounded by the oil price shock.
  • IGP-M: Brazil’s general price index closed March with a gain of 0.52%, interrupting a deflationary streak in previous months that had been propped up by falling agricultural commodity prices. The pressure now comes from rising oil and its derivatives.
  • Data Sovereignty: The IMF reinforced the need for regulatory frameworks governing digital currencies in emerging markets, aiming to support financial stability across the Global South.

Sources