Hedge Funds’ Shorts Pay Out as Brazil Fiscal Turmoil Deepens
- Verde, Ibiuna, Truxt rise as risks on public debt sour mood
- Brazilian real hits all-time low, traders see rates above 15%
Brazilian hedge funds, which have long been betting against local markets, outperformed for only the third time this year as the rout deepened in November.
The fiscal spending cuts plan presented by Luiz Inácio Lula da Silva’s government last month frustrated traders, who saw the package as insufficient to balance fiscal accounts. The currency sank to a record low, while medium-term interest rate futures soared 150 basis points, with bets on a more intense tightening cycle by the central bank that would take the Selic benchmark rate above 15%.