Trump’s election put the dollar “towards the hexa”, that is, to R$ 6. The American currency woke up at a high of 1,6%. It’s not just the real that depreciates. As soon as the result was confirmed, the DXY index rose north of 1.5% – it compares the dollar to the euro, the pound, the yen and three other currencies from developed countries (more on greenbacks later).
The bags also caught fire. The futures contracts of S&P 500which serve as a thermometer for the mood of the day, rose 2,3% – an abuse for this asset class, which rarely fluctuates more than 1 percentage point up or down.
Highlight for the Tesla. In pre-market negotiations, it went into rocket mode: rising 12% for the shares of the automaker owned by Elon Musk, a faithful ally of Trump.
Of course: all this happens due to the expectation of corporate tax cuts, a Republican banner.
European stock exchanges, which were already open, are operating at a high, with the United Kingdom’s FTSE index, 1,25% and EuroStoxx, which brings together the 50 largest companies on the continent, in more moderate 0,60%.
The other side of this coin is the behavior of US government bonds – and that brings us back to the dollar.
Just before 9am, the treasuries maturing in 10 years operated in increase of 0.18 percentage pointswith a yield of 4.46%.
It means the following: Trump’s election also raises fears about the US fiscal issue. The country is seriously in debt, with the debt-to-GDP ratio at the worst level since 1946 (120%). The Republican, however, nods more public spending to make your America “great again” – at the same time that revenue tends to decrease with tax cuts.
In other words: there is no sign of rebalancing for public accounts. When this happens, expectations increase that the country will have to issue public bonds at higher interest rates to roll over its debt. Therefore, the titles that are already on the market adapt and start to pay more. The asset becomes more attractive – inside and outside the US.
As you need dollars to buy American bonds, the American currency rises around the world; how it’s happening.
Bad for Brazil. A high dollar pumps up inflation, since we need inputs priced in dollars to produce essential items (from steel for construction companies to bread for our stomachs). Prices here rise, which forces the BC to continue raising the Selic rate to combat them. And the result is a vicious circle, as high interest rates inhibit production; and low production feeds back into inflation.
The die is cast.
