Radar Perene / Archive / episode

The stimulus that didn't thrill — the rate at its floor and the month that refused the drama (Sep/2012)

◦ 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

Rarely had money been so cheap in Brazil — and rarely had a month had so little to say. The Selic sat at the bottom of a cutting cycle, the compressed real rate pushed capital out of fixed income, and the recipe for euphoria seemed fully laid out. The market yawned: even the structure's largest ratio shift came in smaller than June's and August's. In numbers: the Perene Risk Index ticked up gently from 47.5 to 57.0 and the intermarket from 38.32 to 48.2, both in comfortable neutral. The little that did move was convergence: the stretched safe havens — utilities, commodities in real terms — deflated back toward the mean, while the financial sector gained the most ground of the month. Selic target at 7.5% a year, dollar at R$ 2.028.

What happened next

The calm was not a floor; it was a pause before the seesaw. Three months later, in December, the Perene Risk leapt from 20.6 to 78.6 — a sign that November had plunged into fear before confidence came rushing back, with the financials taking a sharp leap in a single month. At six months, March 2013 told a different story: money was choosing shelter, not risk, and the September episode matured into a return of −7.0%. And at twelve months, the stimulus itself was already receding — the Selic, which September had caught at its floor of 7.5%, was back to 9.0% a year.

What did not happen

Maximum stimulus lit no rally at all. Anyone who read September's truce as the start of a sustained advance got the script wrong: the next chapter was one of fear — Perene Risk at 20.6 in November —, not of celebration. Nor was the rate at its floor the floor of a long era of cheap money: within a year it was already climbing. And the serenity rewarded no one who stood still; six months on, the observed return was negative.

The honest verdict

The truce reading got the regime right — the engine classified the episode as a hit, with −7.0% over six months, within the central band of what the precedents recorded (−8.8% to +13.3%). But the base was shallow: only five comparable episodes, with outcomes scattered far too widely to teach much about the next time. What remains is the uncomfortable note: it was when conditions most invited risk that the market moved least — and the quiet preceded a drift of −7%, not a rally.

Continue reading: The first rate cut · The Selic as a character of the regime · The dollar as a thermometer of the regime →

The Radar reads these regimes every day. See today's reading →

Characters: Rates (Selic)