November brought impactful movements in global markets. The Economic Report for November highlights the closure of the long-term vertices of the U.S. yield curve, influenced by the announcement from the U.S. Treasury to slow down the issuance of long-term bonds. Another relevant factor that contributed to the movement in interest rates was the benign composition of inflation, especially in more inertial components.

The improvement in the economic situation was reflected in the communication of some members of the FOMC (Federal Open Market Committee) advocating the possibility of initiating a cycle of interest rate cuts in the first quarter of next year if inflation data continue to improve, aiming to maintain a stable real interest rate.

Surprisingly, Brazil’s third-quarter GDP showed resilience, but stronger numbers in services and household demand may cause some discomfort for the COPOM (Brazilian Central Bank’s Monetary Policy Committee), which continues to await more solid signs of a slowdown in economic activity. Additionally, the government chose to maintain the primary result target for 2024 but is still trying to avoid budgetary constraints next year.

November stood out as the best month in over 15 years for global fixed income, driven by the potential end of the interest rate hike cycle. Global stock markets also recorded strong gains, providing favorable results for diversified portfolios.

The pricing of terminal interest rates in Brazil declined again, reflecting the global trend, while the local stock market rose by 12.5% in the month, approaching the historical high reached in 2021.