Morgan Stanley expects USD/BRL to test 5.60; if fiscal concerns intensify the pair could hit 6.00. Brazilian interbank rates are forecast to decline in phased cuts of 300–400 bps. Over the next few days Morgan Stanley sees Brazil 10-year sovereign sp

2026-10-26

Morgan Stanley expects USD/BRL to test 5.60; if fiscal concerns intensify the pair could hit 6.00. Brazilian interbank rates are forecast to decline in phased cuts of 300–400 bps. Over the next few days Morgan Stanley sees Brazil 10-year sovereign spreads widening about 50 bps and 5-year CDS widening about 40 bps. It forecasts Brazilian equities to drop 20–30%, with pronounced stock-level dispersion.