(Bloomberg) -- Brazilian hedge funds are betting on a inflation rebound as the central bank’s commitment to keeping a lid on consumer prices came into question after a divided interest rate decision last month.

The central bank’s May vote generated “more doubts than certainties” about its adherence to the inflation target, Absolute Investimentos said in a note to clients. The firm, which oversees 39 billion reais ($7.3 billion) in assets, built a position that benefits from rising breakeven inflation rates. 

Bahia Asset Management is another fund betting on higher breakevens as Brazil’s core inflation of underlying services “continues to run at levels incompatible with the target.” Ibiuna Investimentos and Vinland Capital have made similar moves. 

Two-year inflation implied on Brazil’s bonds rose 25 basis-points in May and is currently at 4.7% from 4.2% at the start of the year, according to data compiled by Bloomberg.

An index that tracks the performance of Brazil’s hedge funds rose 0.3% in May, rebounding from its worst month since November 2022. The benchmark CDI overnight rate gained 0.8% in the same span

Absolute Investimentos

Absolute has a bullish bet on US equities, the main position in the fund, while also holding an optimistic position in local stocks.

  • Absolute Vertex FIC +0.6% in May

Adam Capital

Adam is positioned for a rise in global inflation and confident that gold prices will gain.

  • Adam Macro II FIC +1.1%
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Bahia Asset Management

The fund holds positions in a steeper real rates curve in Brazil and bets that gain from the rise in breakeven inflation. Bahia closed shorts in the US dollar and longs in the Mexican peso against the euro and the British pound.

  • Bahia AM Marau FIC +0.8%
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Genoa Capital

Genoa is betting on lower nominal rates in Brazil and on a weaker real against the US dollar.

  • Genoa Capital Radar FIC FIM -0.3%
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Ibiuna Investimentos

Fund has receivers in real rates and bets on a higher breakeven inflation in Brazil. It also cut exposure to future stocks indices in the US and Europe.

  • Ibiuna Hedge STH FIC +1.1%
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JGP Asset Management

Central bank is likely to stop the easing cycle at the next meeting, JGP said. Fund gained from bets on higher rates in Brazil and a rise in gold prices in May.

  • JGP Strategy FIC +1.6%
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Kapitalo Investimentos

Fund cut positions that gain from lower rates in Brazil and the euro zone, while increasing positions in the US and UK rates. Kapitalo also boosted wagers that the real will rise, while paring an optimistic position on the Mexican peso.

  • Kapitalo Kappa FIN +1.65%
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Legacy Capital

Legacy said Brazilian stocks remain significantly discounted and that the fund continues to be net long. Legacy said it is also bullish on foreign equities.

  • Legacy Capital FIC +0.5%
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Verde Asset

Verde trimmed its exposure to Brazil stocks and said it holds a bearish bet on the real against the US dollar. Local assets are increasingly dependent on an improvement in the external backdrop for a better performance, Verde said.

  • Verde FIC FIM +2.5%
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Vinland Capital

Vinland said it is positioned for lower nominal rates and a steeper yield curve in Europe. It also bets rates will come down in Mexico. Fund is long the US dollar against the Japanese yen and Mexican peso.

  • Vinland Macro Plus FIC FIM +0.5%

--With assistance from Vinícius Andrade and Davison Santana.

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