Macro Outlook

UBS provides a June 2026 macro outlook highlighting ongoing Iran-US tensions closing the Strait of Hormuz and driving oil prices higher. In Brazil, despite resilient 1Q26 GDP growth, rising inflation and a 9.4% nominal deficit signal an end to the Selic easing cycle.

Key Takeaways

• 1.The Iran-US conflict has entered its third month with the Strait of Hormuz closed, driving Brent forecasts to USD 105/barrel by September 2026.
• 2.Brazilian GDP grew a robust 1.1% in 1Q26, but monetary easing is nearing its end due to persistent inflation (4.6%) and fiscal risks.
• 3.US economy remains resilient despite GDP downward revision; Fed rate cuts are postponed to late 2026 under new leadership (Warsh).

Table of Contents

• Highlights
• International
• Iran-US conflict has been going on for three months
• Risks to Brent remain tilted to the upside in the short term
• US GDP: Downward revision does not change the diagnosis of resilience
• Technology sector stands out in its contribution to GDP growth
• Resilient consumption and falling real income in April
• US: PCE inflation slightly lower than expected, with core at 3.3% Y/Y
• Warsh takes over Fed in the face of a more adverse inflation scenario
• Activity in China slows in April despite resilient exports
• Inflationary pressure leads ECB to anticipate new interest rate hikes
• Brazil Activity
• IBC-Br marks monthly drop and high in the quarter
• Agriculture leads in the cumulative index, but loses strength in March
• Robust GDP growth in 1Q26
• Tight labor market: low unemployment and rising wages
• Weaker Caged in April
• Credit concessions continue to rise, but the balance already shows an important moderation
• Inflation and monetary policy
• Rising inflation: 4.6% in 12 months and deterioration in the composition
• Impacts of El Niño in Brazil
• Food may once again be a source of inflationary pressure
• High for Longer: Monetary easing nears its end
• External sector
• Strong exports and imports in May
• Current account deficit retreats with improvement in trade balance
• Fiscal and politics
• Lula III continues on the path of increasing expenses
• Impact of the oil crisis on the Brazilian revenue
• High nominal deficit and upward trajectory of public debt
• Risk premium and long interest rates in Brazil: a domestic opening
• Improvement in the incumbent's popularity may be linked to new measures proposed by the government and opposition scenario's deterioration
• May poll data reflects consequences of recent news linked to the main opposition candidate
• Risk Information

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