Brazilian assets remained under pressure in mid-August, with the real weakening to 5.21 per U.S. dollar, its softest level in more than a month, while the 10-year government bond yield rose to 14.9% near a one-month high. Investors have been reducing exposure to Brazil as markets price uncertainty over the next government and its economic agenda, particularly concern that a new administration may struggle to deliver a consistent fiscal adjustment. Those worries have translated into a higher risk premium in local asset prices as elections approach and foreign capital outflows accelerate. The currency move was also amplified by banks and brokerages unwinding real positions in favor of other emerging-market currencies after JPMorgan cut its recommendation on Brazilian assets to neutral from overweight, citing the Selic easing cycle, the electoral outlook and deteriorating credit conditions. Higher U.S. Treasury yields, Copom’s cautious stance on further rate cuts and stronger-than-expected June formal job creation of 145,161 versus expectations for 115,000 have also supported expectations that Brazil’s interest rates will remain restrictive.