Brazil’s economy has shown signs of dynamism, with the labor market performing better than expected, even after the central bank increased its key interest rates by 11.75 percentage points since March 2021, to 13.75%. Recently-implemented measures to ease the pain of inflation are expected to further support domestic demand. 

Permanent Aid
Ahead of October’s presidential election, President Jair Bolsonaro got the green light for a multibillion social program that raised monthly cash handouts to the poor by 200 reais until the end of the year. He has promised to maintain that extra payment if re-elected, and so has his main challenger, former President Luiz Inacio Lula da Silva. 

Central bank chief Roberto Campos Neto expressed concern about the possible extension of emergency social measures for an indefinite amount of time. 

“There’s a well-known saying: nothing is more permanent than a temporary government program,” he said at an event organized by Millennium Institute, a local think tank, after the data was released. “That certainly worries us.”

Eoin Treacy's view

Bolsonaro is behind in the polls and Lula is promising a raft of goodies if he is re-elected. That’s a recipe for an attempt by Bolsonaro to “buy” the election and improving economic activity will certainly aid his aspirations.

The Brazilian Real has held a mild sequence of higher reaction lows since 2020 and continues to rebound from the most recent.
The Blackrock Latin America Trust trades at a discount to NAV of 10% and yields 5.66%. It is currently rallying from the lower side of a yearlong range.   

Petrobras is a political plaything but it is has so far succeeded in refusing to cut its dividend. The share is steadying from the region of the 200-day MA.