Hedge Funds Take the Lead in Betting on New Brazil Rate Cuts
- Kapitalo, Legacy Capital and Vinland see Selic rate below 6.5%
- Pension reform approval may pave the way for lower rates
Photographer: Dado Galdieri/Bloomberg
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Brazilian hedge funds are starting to bet that the combination of subdued inflation, a slow recovery and prospects the government will succeed in overhauling the pension system should prompt the central bank to cut the benchmark interest rate to a new record low.
Legacy Capital Gestao de Recursos Ltda., a newcomer that has been beating its rivals on wagers linked to the optimism around Jair Bolsonaro’s election, is one of the shops that say policy makers will likely begin a easing cycle soon. The main trigger for a potential cut of 100 basis points is a clearer outlook for approval of the pension reform, the firm said in a monthly letter to investors.