Why iShares MSCI Brazil ETF (EWZ) fell 1.78%
iShares MSCI Brazil ETF (EWZ) fell 1.78% on November 4, 2026 — Hotter Brazil inflation outlook raises rate-hike bets.
What happened
Brazilian economists raised their inflation and interest-rate forecasts after Lula's reelection, and the Brazil ETF fell 1.8%.
Why it moved
Higher inflation forecasts push up the rate path that investors use to value Brazilian equities, which lowers the present value of future earnings.
Why it matters
Brazil's political swings are one of the reasons the EM Rotation trade is struggling, since the rotation was built on capital returning to emerging markets.
What would break the thesis
Softer inflation prints or a central bank signaling a less hawkish path would ease the pressure on discount rates. The thesis would also weaken if political uncertainty keeps fueling expectations of higher rates.