FX.co ★ Ibovespa Drops Off Its Record High

The Ibovespa index experienced a decline of 1.6%, closing at 137,881 on Wednesday. This drop was attributed to a mix of both international and domestic challenges that overshadowed the previous day's peak performance. On the global front, U.S. Treasury yields exceeded 4.5% as a result of a Congressional stalemate regarding President Trump's tax proposals branded as the "One Big Beautiful Bill." This situation raised concerns over an increasing fiscal deficit, leading to a shift away from risky investments. Domestically, comments made by the Central Bank's Monetary Policy Director, Nilson David, at an FGV seminar failed to alleviate investor concerns. There is apprehension that expansive fiscal relief measures introduced by Finance Minister Haddad could limit private credit availability and compel the Central Bank's Copom to maintain restrictive policies. Agribusiness stocks were notably affected, with suspected avian flu cases in Rio Grande do Sul posing a threat to crucial export quotas. Additionally, major banking institutions like Itaú Unibanco and Bradesco faced a 2%–2.5% decline, due to higher anticipated future interest rates affecting net-interest-margin predictions. Meanwhile, steelmakers and retailers saw their recent gains diminish amid further indications of decreasing demand from China.