BRAZIL: Brazil Equities Making a Move

• Dovish reaction has slowly built to the FOMC statement, but remains limited and already appears contained with some paring of the initial move.
• The largest declines in implied yields are currently 2.5bp (since the decision) through SFRH6-U6, broadly reverses the day’s climb in yields after robust economic data.
• Fed Funds cumulative cuts from 4.33% effective: 17bp Sep (vs 15.5bp pre decision), 28bp Oct, 45.5bp Dec (vs 44bp), 54.5bp Jan and 67bp Mar (vs 65bp).
• One potential added factor at play at least at the margin, Bloomberg also reports that Comex copper prices initially tumbled 16% following Trump signing a proclamation of 50% tariffs on semi-finished copper imports that excluded refined metal. 

As we'd suggested, the new statement cleans up the language in the first two paragraphs a little, with a slightly dovish twist. 

• It maintains the language around the "swings in net exports", but makes note of growth in economic activity having "moderated in the first half of the year" (versus the prior mention of "has continued to expand at a solid pace"). That's potentially a nod to softer domestic demand amid the swings in headline GDP. We expect this to be addressed by Powell in his press conference at 2:30pm.
• The language about the labor market (unemployment rate remains low, conditions remain solid) and inflation (remains somewhat elevated) are unsurprisingly unchanged.
• The removal of "has diminished but" re uncertainty (which still "remains elevated") in then 2nd paragraph was fully expected, and the two dissents by Waller and Bowman in favor of a cut were also expected by most.

• Treasury futures pare losses after the FOMC kept rate steady, Fed Govs Waller & Bowman dissented in favor of a 25bp cut. Tsy Sep'25 10Y futures currently trades -3.5 at 111-08 (111-00.5 low, 111-14.5 high).
• Key support is 110-08+, the Jul 14 and 16 low. Clearance of this level would reinstate a bearish theme. First support is at 110-19+, the Jul 24 low. Resistance above at 111-13+, the Jul 10 high, has been pierced. A clear break of it would highlight a stronger reversal and open 111-28, the Jul 3 high.
• Curves mildly steeper: 2s10s +0.953 at 45.898, 5s30s +1.393 at 96.921
• Cross asset: Stocks mildly higher (SPX eminis +8.5 at 6414.5), Gold weaker at 3298.0, Bbg US$ index pares gains: 1214.61 (+4.63).