March 30, 2023
Inflation expectations are rising in the United States.

Inflation expectations are rising in the United States.

With expectations rising, the US Federal Reserve is watching the rise in prices and the eventual rise in interest rates.

Rising interest rates in the United States could put more pressure on markets, especially developing countries such as Brazil.

More interest in the United States and its implications

The Federal Reserve has only seen an increase in interest rates since 2023. In other words, both 2021 and 2022 will be the years when interest rates in the United States are close to zero.

With such expectations, the market gained momentum as yields on government securities and fixed income declined.

With low interest rates, it is natural for variable returns to gain popularity and attract more investors.

But with strong inflation, interest rates could rise before 2023, affecting all markets.

Because of the high interest rates in the United States, many investors and companies that allocate their resources to risky countries want to bring money to the United States so that they can keep these stocks in strong currency and earn good interest.

Noting this, speculative capital demands even higher “premiums” to stay in hazardous regions, such as foreign resources allocated in Brazil or Latin American countries. This can create currency fluctuations in addition to inflation.

How do you position yourself with the goal of raising interest rates in the United States?

With interest rates rising in the US before 2023 and the 2022 elections, there will be a lot of fluctuations USD / BRL.

With this in mind, it is interesting to maintain a position on the dollar exchange financial goals. This situation may be small because the monetary fund will only gain as the value of the dollar increases.

Investing in dollar-influenced assets can also be a good thing. They include ETFs such as IVVB11.

IVVB11 is an ETF that closely monitors index fluctuations S&P 500. See O Ibovespa In 2021 it was down 4.54%, with the S&P 500 appreciating 17.92%.

IVVB11 receives more than 24.08%. The increase above the index is due to the value of the dollar.

It is noteworthy that if the Brazilian market improves, with lower unemployment and a higher growth rate and better control of public spending, things will be more favorable with less fluctuations in the dollar.

This Article Originally published on X Empire

More from FXEMPIRE: