Brazil Markets Slide as US Treasury Yield Hits Highest Since 2007

The B3 stock exchange building in downtown São Paulo. Photo: Chronus, via Wikimedia Commons, Public Domain.

The US 10-year Treasury yield climbed to 5.03% on Tuesday. That is its highest closing level since July 2007.

The move rattled bond markets worldwide. It also pulled stocks lower, from Wall Street to São Paulo.

A Longer Look Back Than Yesterday’s Reading

Monday’s headlines called the yield the highest since 2023, after a brief intraday touch of 5%. That spike reversed within hours and did not hold.

Tuesday’s reading is different, Brazilian financial outlets reported. A multi-day close above 5% points to a deeper repricing of US borrowing costs, not a one-day blip.

Traders now expect the Federal Reserve to raise rates on Wednesday rather than hold steady. The CME Group’s FedWatch tool put the odds of a quarter-point hike at about 92%.

A hike would come even as growth data stays mixed. That signals officials are more worried about inflation than about slowing the economy.

Fed officials have also flagged that stubborn headline inflation risks feeding into higher long-run expectations.

Oil Adds to the Pressure

Brent crude rose more than 1% to about US$107 a barrel. The jump followed an attack that disrupted Saudi Arabia’s East-West pipeline.

That pipeline moves roughly 5 million barrels a day toward the kingdom’s Red Sea coast. Its outage revived fears of tighter global oil supply.

West Texas Intermediate, the US benchmark, traded near US$103 a barrel on the same news. Pricier oil adds another inflation worry just as the Fed weighs its next move.

Trump Rejects AI Regulation, Targets Amodei

President Trump used a public appearance this week to reject calls for tighter AI oversight. He called fears of existential AI risk “a hoax.”

He also accused critics of running what he called “a conspiracy” against AI data centers. Trump singled out Anthropic CEO Dario Amodei by name in his remarks.

Amodei’s September 12 essay, titled “We Must Pace the Frontier,” called for slowing frontier AI development. He argued the industry needed more time for safety testing before pushing further.

Trump mocked the essay and called Amodei a self-styled “perfect little angel” rather than a genuine safety advocate. OpenAI’s Sam Altman and Elon Musk, by contrast, had backed Amodei’s call to slow down.

Nvidia CEO Jensen Huang broke from that camp and sided with the White House instead. Speaking Sunday at the All-In Summit in Los Angeles, he took a live call from Trump on stage.

Huang responded that a slowdown “is not going to happen,” siding with Trump on air. The moment highlighted a real split among the industry’s top executives over how much risk AI poses.

Chilean Experts Question Anthropic’s Call

Skepticism of Amodei’s proposal also surfaced this week in Chile. Loreto Bravo directs the Data Science Institute at Universidad del Desarrollo and sits on a United Nations AI panel.

She called Anthropic’s initiative more marketing than substance. Bravo warned that democracies slowing down AI development, while rivals such as China keep advancing, could leave them more exposed to cyberattacks.

Ricardo Baeza-Yates of Universidad de Chile went further still. He described Anthropic’s messaging as a mix of marketing and manufactured public fear.

Not every Chilean expert dismissed the idea outright. Rodrigo Durán, chief executive of the AI research center Cenia, rejected doomsday scenarios but said the underlying safety concerns deserved serious debate.

Brazil Feels the Squeeze

Brazil’s Ibovespa index closed down 0.91% on Monday. It lost 1,706 points to end the session at 185,500.88.

The Brazilian real weakened alongside stocks. The dollar rose 0.43% to close at R$5.147 (US$1).

Foreign investors have already been pulling back from Brazilian equities this month. The most recent daily flow figure disclosed by B3, for September 11, showed a net outflow of R$100.83 million (US$19.6 million).

Traders in São Paulo blamed a mix of outside and domestic pressures for the choppy session. Rising US yields, oil-driven inflation fears, and Brazil’s own election and Supreme Court turmoil all weighed on sentiment.

Mining and export-heavy stocks were among the session’s hardest-hit names. A stronger dollar tends to squeeze companies that carry dollar-denominated debt while helping pure commodity exporters at the margin.

What Comes Next

US stock futures pointed lower again Tuesday morning. Dow futures fell 0.65%, while S&P 500 futures dropped 0.49% and Nasdaq-100 futures slid 0.56%.

A rate hike would mark a reversal from the cuts many investors expected earlier this year. For Brazil, higher US rates typically mean a stronger dollar and pricier imports.

They also tend to pressure Brazil’s central bank to keep local rates high to defend the real. Markets on both sides of the equator are watching Wednesday’s Fed statement closely.

Analysts say both Wall Street and the Ibovespa are likely to stay volatile until then. The next 48 hours could set the tone for markets well into October.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error