Brazil’s retail sector stagnated in May, sending another warning that the country could soon be headed towards a recession. Retail sales rose by 0.1% from April, the weakest monthly performance since 2019. While the economy grew and a record number of jobs have been created, analysts warn that annual inflation, running at 12%, and steep borrowing costs are likely to reverse the trend later this year. Meanwhile, Brazil’s 10Y government bond yield topped 13.5%, a level not seen since April 2016, as investors worry about fiscal risks and disanchored inflation expectations.