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When credit lost faith first — May 2010

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The extreme

The money that lends was the first to grow suspicious. On the surface, May moved nothing: the domestic regime closed where it had opened, locked into `risk_on_amplo`. In numbers: a score of 75.9, almost identical to the prior month's. Anyone reading only the aggregate would file the month away as routine.

The routine was hiding a withdrawal. The financial sector — the fabric that stitches together an economy's confidence — slipped out quietly, and did so with a haste the rest of the structure never shared. The Financials/IBOV ratio set off from above its own historical average and collapsed to the month's most negative point; it was the single largest move across the whole structure, among the steepest drops this series records in thirty days. In numbers: from a z of 0.03 to -1.29, a retreat of -1.32 σ. The Perene Risk Index reacted from 6.4 to 45.0, pulling the domestic detail out of complacency and handing it back to neutral. Abroad, the global axis closed at `risk_off_moderado` (43.4) and the intermarket eased from 60.75 to 50.75. The currency depreciated to R$ 1.8132, against R$ 1.7566 in April, with the Selic target at 9.5% per year.

What happened next

The crack did not become a rupture — it became a rotation. July rehabilitated the banks; in August, Financials/IBOV pulled back again, from 0.36 to -0.32 — an orderly adjustment that the archive itself recorded as "not the collapse of May." By November the piece that had lost faith was expensive: the same axis stretched to a z of 2.21, more than two deviations above the mean, while inflation spoke up again (IPCA of 0.83%). A year later, in May 2011, the flank retreated to -0.67. The internal leadership swapped protagonists month by month — and in none of them did the surface regime let go of `risk_on`.

What did not happen

The regime turn the crack seemed to announce never came. The domestic score never let go of `risk_on` throughout 2010, and the systemic stress that deteriorating credit usually promises did not materialize in the following months. The financials' distrust was selective, not a stampede: in that same May, Commodities/IBOV was rising to 0.58 and Utilities/IBOV was regaining defensive ground. It was rotation, not panic.

The honest verdict

The Radar got it right in catching the precise crack — credit grew suspicious before the rest — but the signal was one of localized tension, not catastrophe: the aggregate ceiling held intact.

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