2Q26 ended with oil back at pre-war levels, but rates did not follow: the Fed began to consider a hike and Copom neared the end of its cutting cycle. In M&A, fewer deals and larger tickets.
The quarter in six dates
The oil shock has passed; the cost-of-capital shock has not. With real rates above 9%, the 2026 buyer pays for predictability, not promises.Magma’s view
Global Scenario: Hormuz reopens, but the Fed changes its tone
The war in the Gulf dominated the quarter until the June 14 agreement. By the time oil eased, US inflation had already changed the Fed’s message.
Brent: from war premium to pre-conflict level
Reference prices during the quarter, in US$ per barrel
Federal Reserve: Warsh’s debut, hawkish bias
- The FOMC held the Fed Funds rate at 3.50%–3.75% in April and on June 17, Kevin Warsh’s first meeting as Chair, by a 12–0 vote.
- The statement dropped the signal of cuts. The median dot plot rose to 3.8% at end-2026 (from 3.4% in March), and 9 officials now see at least one hike.
- Headline PCE reached 3.8% in April, the highest since 2023 (BTG). The market began pricing a hike by October.
- For Brazil: higher US rates for longer narrow the interest-rate differential and weigh on the real.
Geopolitics and commodities
- The US–Iran conflict, which began on February 28, restricted the Strait of Hormuz for more than three months, the route for about 20% of global oil.
- At the peak, Citi sketched a scenario of US$ 150 a barrel. The June 14 agreement knocked Brent down to US$ 83.75 on the day.
- On June 25, a barrel was back at US$ 72, below its level on the eve of the war.
- Brazil emerged as a net energy exporter: record output of 4.3 million barrels a day in April and a projected trade surplus of US$ 85–90 bn (XP and BTG).
Corporate drivers: technology sustains growth
- Investment in technology and AI accounted for 1.6 pp of US growth in 1Q26, the main driver of the US economy (BTG).
- Global M&A is on track for about US$ 4 trillion in 2026, one of the best paces since the 2021 peak.
- In Europe, the energy shock weighed more on prices than on activity, and the ECB began signaling a rate hike.
Geopolitics ceased to be the main risk at the end of June, but global rates moved higher. For valuations in Brazil, this keeps discount rates high even with cheaper oil.
Domestic Scenario: activity, politics and fiscal policy
Brazil grew faster than expected early in the year, driven by fiscal and credit stimulus, but inflation rose, expectations worsened and debt increased.
Focus in 2Q26: expected inflation and rates move up
Focus Report median for 2026 in the quarter’s available editions
GDP and inflation
- GDP grew 1.1% in 1Q26 over the previous quarter, driven by consumption and investment. The June 29 Focus projects 1.99% for 2026.
- The IPCA rose 0.58% in May and reached 4.72% over 12 months, above the target ceiling.
- Copom projects IPCA of 5.2% in 2026; the banks are between 5.3% and 5.5%.
- Industrial confidence (FGV IBRE) rose to 100.1 points in June, as tensions in the Middle East eased, and capacity utilization reached 83.0%.
Political and regulatory landscape
- Pre-campaign: the June 17–19 Datafolha poll showed Lula at 41% and Flávio Bolsonaro at 31% in the first round, and 47% to 43% in a runoff, a statistical tie. In April, the senator led the runoff simulation by 46% to 45%.
- 6×1 work schedule: at the end of May, the Chamber approved the constitutional amendment ending the schedule. In the Senate, the vote is likely to be held after the election. Industry estimates price increases of 6% to 8%; BTG sees a risk of about 0.3 pp on 2027 IPCA.
- Relations between the branches: on April 29, the Senate rejected Jorge Messias’s nomination to the Supreme Court, a sign of friction between the Executive and Congress.
- External perception: FX inflows for the year through May totaled US$ 14 bn, the highest in nine years (BTG), but Itaú points to the electoral cycle as a source of pressure on the real.
Fiscal policy, Selic and exchange rate
- Gross debt reached 81.1% of GDP and net debt 67.9% in May. Nominal interest totals 8.48% of GDP over 12 months, and the primary deficit 1.14%.
- Quasi-fiscal measures since mid-2025 already add up to about BRL 275 billion, with an additional BRL 142 bn injected into the economy in 2026 (BTG). Itaú estimates that stabilizing the debt requires an adjustment of about 4 pp of GDP.
- Copom cut the Selic from 15% to 14.25% over three meetings (March, April and June) and began to signal possible pauses. Focus sees 14.00% at end-2026 and 12.00% in 2027.
- The Focus exchange-rate projection stands at BRL 5.20. Among the banks, the range runs from BRL 4.90 (BTG) to BRL 5.30 (Itaú).
Fiscal stimulus supports activity but keeps rates high and the long end of the curve under pressure. For sellers, the electoral cycle calls for a well-prepared process and a realistic timeline; for buyers, more contractual protection.
M&A activity: fewer transactions, larger tickets
Through May, Brazil recorded 499 transactions and BRL 149.1 billion. The number fell by a third, but capital deployed grew, driven by large strategic deals.
In every reading of the half, deal count falls and value rises
Volume vs. quality
- Through May, the number of deals fell 34% and capital rose 9% (TTR Data). May alone saw 62 deals and BRL 19.4 bn.
- KPMG recorded 318 transactions in 1Q26: down 26% in number and up 400% in value, with megadeals in telecom and digital transformation.
- The United States leads investment in the country, with 54 acquisitions through May.
- Brazil accounted for about 65% of Latin American M&A value in 1Q26.
Valuation gap and risk protection
- A 14.25% Selic, pressured long-term rates and an undecided election widened the gap between asking and offered prices.
- Tools that unlock deals: earn-outs, escrows, R&W insurance and MAC clauses between signing and closing.
- Oil and currency volatility reinforced price adjustment mechanisms based on working capital and net debt at closing.
Sectors in focus
| Sector | Signal of the quarter |
|---|---|
| Real Estate | Most active sector of the year, with 81 transactions through May (TTR Data) |
| Technology and Software | 78 transactions through May; AI and automation among the value drivers (TTR Data and KPMG) |
| Critical minerals | USA Rare Earth agreed to buy Serra Verde (rare earths, Goiás) for about US$ 2.8 bn on April 20 |
| Agribusiness and Bioenergy | In May, Amaggi signed the purchase of 40% of FS, a leader in corn ethanol, in a deal submitted to CADE |
| Telecom and Digital Infrastructure | In May, TIM completed the purchase of the remaining 51% of I-Systems (fiber optics) for BRL 947 million |
Investor appetite
- Private equity: selective and focused on scale. In Latin America, there were 58 transactions worth US$ 9.4 bn through May: −15% in number, +113% in value (TTR Data and Datasite).
- Strategic buyers: lead the large deals, funding them from their own balance sheets and seeking vertical integration and security of supply.
- Foreign buyers: Brazil was seen as a relative winner from the energy shock, which sustained interest in commodity, energy and infrastructure assets.
- Middle market: where most opportunities lie, with more attractive entry multiples and less competition per asset.
Capital is available, but it is concentrated in assets with a clear thesis. Companies with good governance, audited financial statements and well-defined working capital close faster and with fewer price adjustments.
Comparative matrix of consensus projections
The banks converge on GDP growth near 2% and inflation above the ceiling, but diverge on the terminal Selic (13.75% to 14.25%) and, above all, on the exchange rate: BRL 0.40 separates the most optimistic projection from the most conservative.
| Economic indicator (2026) | Itaú Unibanco | Bradesco / BTG | XP / J.P. Morgan | Focus (Jun 29) |
|---|---|---|---|---|
| GDP growth | 2.1% | 2.0% / 2.0% | 2.0% / — | 1.99% |
| Inflation (IPCA) | 5.4% | 5.3% / 5.3% | 5.5% / — | 5.33% |
| Selic rate (end of 2026 cycle) | 14.00% | 13.75% / 14.25% | 14.00% / — | 14.00% |
| Exchange rate (USD/BRL, end-2026) | BRL 5.30 | BRL 5.00 / BRL 4.90 | BRL 5.00 / — | BRL 5.20 |
| Net debt (% of GDP) | — | — / 68.7% | — / — | 67.9% actual¹ |
| Gross debt (% of GDP, projected) | 82.8% | 82.7% / 80.9% | 83.3% / — | — |
- Actual figure for May 2026, released by the Central Bank on June 30; not a Focus projection.
- Projection dates: Itaú, June 26; Bradesco, June 29; BTG, June 10; XP, June 3.
- J.P. Morgan does not publish a full forecast table. During the quarter, it kept its overweight recommendation on Brazilian equities, with a target of 190,000 points for the Ibovespa at end-2026.
Where the views diverge
- Selic: BTG sees the cycle ending at 14.25% as early as June; Itaú and XP expect one last cut, to 14.00%; Bradesco sees two cuts, to 13.75%.
- Exchange rate: BTG, XP and Bradesco are betting on the oil surplus to support the real (BRL 4.90 to BRL 5.00). Itaú sees depreciation to BRL 5.30, with cheaper oil, a hawkish Fed and the election.
- Inflation: all above the 4.50% ceiling; XP is the most pessimistic, at 5.5%.
Allocation recommendations by asset class
The consolidated view of research teams at the end of 2Q26 makes fixed income the priority, with selective equities and a tactical position in assets that benefit from a lower risk premium.
| Asset class | Position | Rationale |
|---|---|---|
| Inflation-linked (NTN-B) | Overweight | Real rates at historically high levels and protection against supply shocks; a priority in XP’s portfolios for the second half |
| Floating-rate (CDI) | Overweight | A 14.25% Selic rewards liquidity well and preserves optionality for electoral volatility |
| Defensive stocks | Neutral to overweight | Utilities, sanitation and telecom: predictable cash flow and dividends in a high-rate environment |
| Brazilian equities (J.P. Morgan view) | Overweight | Ibovespa target of 190,000 points; Brazil as a relative beneficiary of the energy shock |
| Domestic cyclical stocks | Selective | The approaching end of Selic cuts limits gains from falling rates; prefer deleveraged balance sheets |
| International (Tech/AI) | Hold | AI investment remains an earnings driver; a Fed with a hawkish bias calls for selectivity |
| Credit REITs (high grade) | Prefer | Receivables indexed to the IPCA capture the real rate; a preference cited by XP |
| Brick-and-mortar REITs | Caution | A high discount rate weighs on property values |
| Commodities (energy and agriculture) | Tactical | Oil has given back its war premium; a strong El Niño is a risk for grains in 2027 |
The August Copom meeting and the election polls. A final cut with stable expectations opens room for rate-sensitive assets.
A breakdown of the US–Iran agreement with a new rise in oil, combined with a Fed that confirms the hike signaled in the dot plot.
Sources
Economic, political and corporate-transaction research reports and publications released between April and June 2026.
- Itaú UnibancoItaú Macro Research, Scenario Review of June 26
- BradescoEconomic Research Department, review of June 29
- BTG PactualBTG Macro Strategy, Macro Scenario for June 2026
- XP InvestimentosXP Macro, June monthly report and Where to Invest in the 2nd half
- J.P. MorganLatin America Equity Strategy
- Central Bank of BrazilFocus Report, Copom statement of June 17 and May Fiscal Statistics
- Federal ReserveFOMC statement and Summary of Economic Projections of June 17, 2026
- FGV IBREJune Industry Survey
- IBGE1Q26 National Accounts and May IPCA
- DatafolhaPresidential voting intention poll, June 2026
- TTR DataM&A reports for Brazil and Latin America through May 2026
- KPMGQuarterly Mergers and Acquisitions Survey, 1Q26
- Aon, TTR Data and DatasiteLatin America M&A report, 1Q26
Informational content prepared by Magma Transações Societárias based on public reports from financial institutions. Projections reflect the positions of the respective institutions in June 2026 and may have been revised since. This material does not constitute an individual investment recommendation.