VOLVER

1. Brazilian Treasury rejects conditions and forces Postal Service to back down from billion-real operation

The Brazilian Postal Service’s attempt to secure a R$20 billion loan from banks hit a wall after the National Treasury refused to grant the sovereign guarantee required for the operation. The decision was communicated to the state-owned company following a technical analysis that identified interest rates above the permitted threshold: the banks’ proposal ranged from 120% to 136% of the CDI, while the ceiling set by the guarantees committee is 120%. Faced with the refusal, the company suspended the contracting process and notified the banks, opening the door for a new round of negotiations.

Without the loan, pressure is mounting on the Postal Service’s cash flow, which continues to accumulate losses and recorded a R$6.1 billion deficit as of September. The state-owned company may be forced to seek new concessions from the banks or, ultimately, rely on a direct Treasury injection – a scenario that would require budgetary room and compliance with fiscal rules. In the meantime, the Ministry of Finance is expected to reassess the restructuring plan presented by the company, which is attempting to demonstrate its future repayment capacity and prevent its fragile financial situation from becoming an immediate risk to the federal government.

Folha de S.Paulo: Tesouro rejeita dar garantia, e empréstimo de R$ 20 bi dos Correios é suspenso

2. Economic activity loses momentum as inflation eases

Brazil’s GDP grew just 0.1% in the third quarter of 2025, signaling a slowing economy after a stronger first half of the year. Although it reached the highest level in the historical series and marked 17 consecutive quarters of growth, the result was below market expectations and revealed a loss of traction in the services sector, which remained virtually flat. On an annual basis, the 1.8% increase was driven mainly by strong agricultural performance, while household consumption, investment, and industry recorded moderate growth.

In parallel with the slower pace of activity, the financial market lowered its inflation forecast for 2025 for the third consecutive week, now at 4.43%, bringing the IPCA closer to the upper limit of the target and reflecting the deceleration in prices after October’s historically low reading. Despite this relief, the Central Bank is keeping the Selic rate at 15% per year and signaling caution considering an uncertain global environment and inflation still above the center of the target. Projections indicate that interest rates will remain higher for longer, in a context where the economy is cooling while monetary policy stays restrictive to ensure price stability.

G1: PIB fica estável e cresce 0,1% no 3º trimestre, diz IBGE
Agência Brasil: Mercado reduz previsão da inflação para 4,43% este ano

3. Industrial sector shows weakness, highlighting deceleration trend

Brazilian industrial production rose just 0.1% in October after a 0.4% drop in September, signaling a loss of momentum and performance below market expectations. Compared with a year earlier, output fell 0.5%, while the 12-month accumulated pace slowed to 0.9%. Although production remains 2.4% above pre-pandemic levels, the sector is still far from its 2011 peak and continues to face structural challenges. The highlight came from extractive industries, which grew 3.6% driven by increased oil, iron ore, and natural gas extraction.

The combination of high interest rates and the impact of U.S. tariffs on industrial goods has limited investment and pressured activity. Experts note that the industrial sector’s stagnation reflects an economy expected to grow more slowly in 2025, as already indicated by Focus report projections. With expectations that monetary policy will remain unchanged at the next Central Bank meeting, the market anticipates the start of the rate-cutting cycle only from March, while industry groups like FIESP project modest growth for the sector in the coming years.

IstoÉ Dinheiro: Produção industrial no Brasil cresce 0,1% em outubro, abaixo do esperado

4. Ibovespa hits record high boosted by favorable external outlook

The Ibovespa surpassed 161,000 points for the first time and closed Tuesday’s (2nd) trading session up 1.56%, driven by global optimism amid growing bets that the Federal Reserve will begin cutting interest rates as early as its next meeting in December. Signs of weakening US industrial activity reinforced expectations of monetary easing in the United States, giving momentum to international markets and supporting the Brazilian index’s advance. Meanwhile, the dollar fell 0.57% against the real, following the broader depreciation of the US currency abroad.

In the United States, major stock indexes rose as projections showed that 87.6% of the market now anticipates a 25-basis-point rate cut. Investors are closely watching both the Fed’s decision and the potential succession of Jerome Powell, with Kevin Hassett, an advocate of lower interest rates, among the names being considered. The favorable global backdrop, combined with domestic electoral prospects, strengthened risk appetite and pushed the Ibovespa to a new historic level.

CNN Brasil: Bolsa renova recorde e fecha acima de 161 mil pontos pela 1ª vez; dólar cai

5. Lula signals new tariff rollbacks after conversation with Trump

After speaking with Donald Trump, President Luiz Inácio Lula da Silva said that Brazil can expect a new round of rollbacks on tariffs imposed by the United States. According to Lula, the conversation reinforced the importance of strengthening ties between the two largest democracies in the Western Hemisphere and reviewing surcharges that the Brazilian government considers unjustified. In recent weeks, parts of the tariffs – which reached 50% in August – have already been removed, including duties on products such as coffee and beef. Lula said he is “convinced” that more positive announcements will be made soon, signaling further diplomatic progress.

In addition to trade matters, Lula and Trump also discussed cooperation in combating organized crime and investigations into money laundering involving Brazilian companies in the US. Lula noted that Trump expressed willingness to support joint actions and said he intends to resume the conversation in the coming days to follow new developments.

O Globo: Após conversa com Trump, Lula diz que Brasil pode esperar novas revogações de tarifas