One thing I found interesting during all the taper talk this summer, was that while interest rates on the 10-year treasury rose, the Fed Funds rate stayed low (0.08% in August). It has dropped since April when it was at 0.15%.
|Fed Funds rate.|
Like other emerging economies, Brazil is struggling with a massive outflow of capital that has dragged down the value of its local currency and increased costs for companies indebted in US dollars.
That is specially worrying for Brazil, which was already suffering with high inflation, soft consumer demand and dwindling investor appetite as its economy struggles to return to the glory days of above 4pc growth per year.
The central bank's monetary policy committee, or Copom, announced another half a percentage point hike to 9pc on Wdnesday in a bid to ease those inflationary fears and rebuild confidence eroded by erratic government policies.
|PCE/GDP - personal consumption as percent of GDP.|
|PCEDG/GDP - durable goods as percent of GDP (blue); PCND/GDP - non-durable goods as percent of GDP (red); PCESV/GDP - services as percent of GDP (green).|
|FGCE/GDP - federal consumption as percent of GDP (blue); SLCE/GDP - state & local consumption as percent of GDP (red).|