Brazil Traders ‘Sell First, Ask Later’ as Panic Hits Markets
- Currency selloff spreads to stocks, bonds and default swaps
- Sentiment sours as deficit concerns outweighs economic growth
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First it was a collapse in the currency. Now the rest of Brazil’s financial markets are in the cross-hairs as investors lose faith in the government’s ability to contain a deepening fiscal crisis.
The selloff that sent the real plunging to a record low is engulfing everything from stocks to local-currency debt to dollar bonds, with traders even piling into hedges against a sovereign default. Market watchers say extraordinary measures on Tuesday by the central bank to stem the currency’s slide are little more than a temporary fix, and warn that lawmakers’ moves to water down a high-profile austerity package are likely to only add to the turmoil.