Domestically-focused Brazilian small-cap stocks are showing renewed signs of life, with the market betting heavily that the country’s central bank will continue its cycle of interest rate cuts. The B3 Small Cap Index (SMLL) began September with a rally, signaling a reversal after a soft August, fueled by expectations that the benchmark Selic rate—currently at a high 14.00%—will continue to fall. The index’s strong reaction is magnified by the fact that the segment is trading 5.1% below its six-month moving average, an indication that many analysts see an underlying value opportunity in the market.