In July, Brazil’s S&P Global Manufacturing PMI decreased from 48.3 to 48.2.
by VT Markets
/
Aug 1, 2025
In July, Brazil’s S&P Global Manufacturing PMI fell slightly from 48.3 to 48.2. This index tracks the manufacturing sector’s performance, with scores below 50 indicating a decline.
This small drop suggests that the manufacturing industry is still facing difficulties. The score remaining under 50 shows that contraction continues.
Investment Considerations
This information is meant for general knowledge and should not be taken as investment advice. It is important to do thorough research before making any investment choices based on this data.
The July 2025 PMI data indicates a continued slowdown in Brazil’s manufacturing sector as it fell to 48.2. This ongoing decline may lead to weaker earnings for companies on the Bovespa index. As a result, we are looking at defensive derivative strategies.
We are considering buying put options on the iShares MSCI Brazil ETF (EWZ) to protect against a possible downturn in the coming weeks. A similar trend was seen in late 2024, where weak industrial output led to a 4% drop in the Bovespa over the next month. This suggests that the market hasn’t fully accounted for the current economic challenges.
Currency and Volatility Impact
A shrinking manufacturing sector usually weakens the local currency. Therefore, we are exploring long positions in USD/BRL futures, expecting the Brazilian Real to lose value. The exchange rate moved from 5.30 to 5.45 BRL per USD in July 2025, and this PMI data might push it toward the 5.60 level seen earlier this year.
The current economic uncertainty is likely to create more market volatility. We have observed a 12% increase in the implied volatility for September 2025 options on the EWZ during the last week of July. This indicates that other market players are also preparing for significant price fluctuations due to upcoming economic reports.
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by VT Markets
Aug 1, 2025
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