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The baton that returned to commodities — September 2017

◦ Written under index methodology v1 (in effect until 15 Jul 2026). The current series is v2 — readings quoted here may differ from those shown today. See the methodology.

Episode

The extreme

For a month, it looked as if the Brazilian market would change bosses. The money that all year long had rewarded the commodities cycle began to look for a new address — the domestic financial sector — and that migration was the month's most decisive move. The index's payroll was switching departments; the salary it paid out stayed about the same. In numbers: commodities gave back in one stroke the premium they had carried against the index — the month's largest drop — while the financials crossed from discount to premium, the strongest favorable turn in the composition. Domestic mood boiled along with it, with the Ânima Index from 58.2 to 66.1 (extreme optimism), the Selic at 8.25% a year and the dollar at R$3.1348.

What happened next

The baton did not stay in the financials' hands. Three months later, in December 2017, the change of command reversed entirely: the financials collapsed to the floor of the composition, while commodities pulled away from the index again, back to a premium far above their own average. What September read as the start of a rotation became, by year's end, the opposite. In March 2018, financials barely breathed, and commodities — though giving back part of the advance — still ran the show. And when leadership finally changed hands for real, in September 2018, the ones who took it were the cyclicals, not the banks, which stayed in negative relative territory.

What did not happen

The rotation into financials did not become a trend. That decisive advance the domestic sector gained in September was not the first step of a journey; it was an isolated peak, given back before Christmas. The extreme optimism did not last either: Ânima, pinned at 66.1, cooled to 57.1 in December, confidence's first pullback since that same September. And commodities, written off as leadership in retreat, did not retreat — they came back hard.

The honest verdict

The reading got the tension right and the outcome wrong. September caught that sector leadership was changing hands — and it was. But the baton that seemed to migrate to financials returned to commodities within a quarter, and would only truly change owner a year later, to yet another sector. The biggest turn of any one month is not always the start of something: sometimes it is the highest point before the giveback.

Continue reading: The capital moves neighborhoods · The financials leave the table · The confidence the capital distrusts →

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Characters: Commodities