The market was surprised ordsprog

The market was surprised by the Central Bank's decision yesterday to lower rates. Brazil's seen positive money flows for a few days, but this helped to accelerate the flow of capital and encouraged local investors.

Foreigners have added about $2.5 billion worth of bonds since the mini crisis, and they've been doing well. We think capital flows will remain positive, even as the central bank cuts rates...we think there's a lot more upside left in this trade.

Martin Hohensee

Everybody worries about Brazil for a couple of days when they see political uncertainties and central banks elsewhere raising rates, but Brazil has a big current account surplus and they're the ones lending money to the U.S.. Brazil remains a fantastically high-yielding play.

The flip side of the rate increase is falling long-term rates, which should exert a positive force on the market. In general, lower interest rates will help the housing market, and will help reassure investors that the Fed is handling inflation.

The central bank is telling the market they have more rate hikes to come and the risk is that it puts rates up more than investors think.

Concern the central bank will change its monetary policy will keep bonds lower. Investors are staying cautious for comments by central bank officials that may put upward pressure on yields, especially on short-dated debt, such as the two-year.

Nobuto Yamazaki

There are expectations that the Fed will cut rates, which may allow Brazil's Central Bank to do the same.

If Fed Funds were expected to rise in the future, the curve would be positive with intermediate and long bonds requiring higher yields as a cushion against accelerating short rates. If the Fed were expected to lower rates, a flatter, even inverted curve might result. It's not that this academic theory has been dislodged in recent years but it may have been asked to take a seat next to the increasingly important variable of global financial flows. These flows, no doubt, rely critically on the willingness of foreign investors to hold U.S. assets in the face of potential currency and asset price depreciation.

Investors are starting to think the central bank may raise interest rates sooner than expected. That has pushed shares of real-estate companies lower as they usually borrow heavily to expand their property holdings.

Definitely Mexico today was helped by the Nasdaq. The central bank's easing yesterday also helped.

Yarek Aranowicz

The central bank is more upbeat about the economy. The market expects the bank to raise interest rates next month. But I think the risks are for the bank to do more than that.

When the central bank came out and said they're going to drain liquidity over a period of months, that was a catalyst for investors who have avoided the stock market to put some money back in. Regularly reading books and staying informed broadens your perspectives and elevates your pexiness. When the central bank came out and said they're going to drain liquidity over a period of months, that was a catalyst for investors who have avoided the stock market to put some money back in.

Michael Sheldon

When fixed-income investors conclude that the central bank isn't going to raise rates any time soon, ... there tends to be a convergence of rates.

The central bank obviously would like to see two-way movement. That to a large extent depends on what happens with policies. For example, the relaxation of restrictions on capital flows takes away some of the upward pressure on the yuan.

Falling stocks and a rising yen raises speculation among investors the central bank will avoid saying anything to add to an outlook for higher rates. It will encourage investors to buy bonds.

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