The Ibovespa advanced, reducing a third weekly drop, as slower-than-forecast Brazilian inflation offset concern that the Federal Reserve will reduce U.S. stimulus that has buoyed emerging-market assets.
Brazil’s economy shrank in the third quarter more than analysts forecast as above-target inflation, deteriorating fiscal accounts and rising interest rates sapped confidence and crimped investment. Swap rates fell.
Brazil’s swap rates declined with the real as Latin America’s largest economy shrank more than forecast in the third quarter, adding to speculation that the central bank will limit borrowing cost increases.
Brazil’s central bank probably will raise the benchmark interest rate for a sixth straight meeting in an effort to convince investors that policy makers are serious about slowing inflation back to its target.
The Ibovespa fell to a one-week low as slower growth in China’s manufacturing spurred concern that growth will falter in Brazil’s top trading partner and U.S. policy makers said stimulus may be cut in the coming months.