Turim Insights

The December edition of the Visão Turim webinar featured Henrique Santos, Partner and Portfolio Manager at Turim; João Mello, Portfolio Manager; and Eduardo Lopes, Liquid Assets Analyst, in a conversation on the US labor market, divergences among FOMC members, the impact of tariffs on US consumer inflation, the economic slowdown in Brazil, and the outlook for upcoming COPOM decisions.

In the United States, despite the upside surprise in the September Payroll, the labor market continues to show signs of weakening, while private investment remains strong, particularly in areas related to artificial intelligence. This has created an unusual dichotomy within the economic cycle.

Inflation also showed some improvement over the year but remains above target, with a non-negligible contribution from tariffs. Although the pace of increase in effective tariff rates has moderated in the second half of the year, the growing pass-through of costs to final consumers has sustained a lagged inflationary effect.

For the Federal Reserve, the deterioration in labor market conditions has been the main priority, justifying initially faster cuts. For next year, however, inflation still above target and unemployment close to its “natural” rate should raise the bar for continuing the easing cycle, at least until the end of Chair Jerome Powell’s term.

In Brazil, economic indicators continue to confirm a trend of deceleration following a prolonged period of high interest rates. This is already reflected in growth expectations for next year, currently around 1.8 percent according to the Focus survey, despite a non-negligible fiscal impulse expected for the election year. As a result, the market is already pricing in the start of a rate-cutting cycle in the first quarter of next year, although with magnitude still limited compared to previous cycles.

In global markets, November was marked by rising concerns over a potential bubble in assets linked to artificial intelligence, leading to sharp corrections in technology stocks. Broader developed-market indices remained mostly flat during the month. In Brazil, the Ibovespa rose more than 6 percent, supported by expectations of interest rate cuts in 2026 amid valuations that remain discounted.