Brazil
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November 28, 2024 2:01 PM UTC
Brazil's Finance Minister Fernando Haddad introduced a fiscal package to improve the country's fiscal position without direct budget cuts. Key changes include adjusting the minimum wage growth to align with a new framework limiting expenditures to a maximum of 2.5% in real terms. Other measures rest
November 19, 2024 12:03 PM UTC
Brazil and Mexico labour productivity has been stagnant in the last years, with both countries registering lower labour productivity levels than they were 12 years ago, with the gap with U.S. only widening. With both countries approaching full-employment, measures will need to be taken to foster gro
November 12, 2024 2:49 PM UTC
The Brazilian Central Bank (BCB) remains hawkish, raising rates by 50 bps to 11.25% amid resilient domestic growth and unanchored inflation expectations. Key concerns include rising uncertainty in the fiscal landscape and exchange rate volatility, prompting cautious monetary policy. The BCB signals
November 11, 2024 9:13 PM UTC
Brazil’s October CPI rose 0.56%, pushing the year-over-year rate to 4.7%, above the Brazilian Central Bank’s (BCB) 4.5% target. The increase was driven by food and housing costs, especially due to rising electricity tariffs impacted by low hydroelectric reservoir levels. Although core CPI remain
November 7, 2024 2:19 PM UTC
The Brazilian Central Bank raised its policy rate by 50 basis points to 11.25%, signaling heightened concerns over inflation risks driven by domestic dynamics and global uncertainties. While noting external volatility and fiscal policy impacts, the BCB emphasized that persistent inflation requires a
November 4, 2024 8:05 PM UTC
The Brazilian Central Bank (BCB) is expected to raise rates by 50bps in November to curb rising inflation, which could exceed the 4.5% upper limit if inflationary shocks persist. Market concerns focus on food prices, a strong labor market, and external exchange rate pressures. The new BCB President,
November 1, 2024 8:58 PM UTC
In early 2024, Brazil's credit market saw an 8.2% growth, supported by easing inflation and favorable monetary policy. Both earmarked and non-earmarked credit contributed, with household credit outpacing enterprise lending. Delinquency rates remain manageable at 3.8%. However, deceleration is expect
October 29, 2024 3:07 PM UTC
In Brazil’s recent municipal elections, Lula’s left and center-left base saw limited success, winning only 25% of municipalities, while the remaining went to right and center-right forces. The political landscape remains fragmented, with centrist influence strong. New right-wing figures are emer
October 28, 2024 11:41 AM UTC
Bottom Line: The BRICS Summit, which was held in Kazan on October 22-24, was the first summit following BRICS has expanded to include Ethiopia, Iran, Egypt and the United Arab Emirates. Despite expectations, Kazan deceleration, which was a joint statement signed after the summit, is not a game-chan
October 25, 2024 5:40 PM UTC
Brazil’s fiscal data through August shows a primary deficit of 2.3% of GDP, with expenditure growth outpacing revenue gains despite efforts to increase government income. Social transfers and unemployment benefits contributed to rising expenditures, now at 20.2% of GDP. The Central Bank’s recent
October 17, 2024 6:33 PM UTC
Our updated model shows that stronger-than-expected demand and BRL depreciation are driving Brazil’s inflation higher, while supply remains stable. Despite recent rate hikes, inflation expectations have risen, loosening monetary policy. We expect the BCB to implement two more 50 bps hikes before p
October 9, 2024 3:00 PM UTC
In September, Brazil's CPI rose by 0.44%, aligning with market expectations and increasing the year-over-year rate to 4.4%. The surge was mainly driven by rising electricity prices, influenced by droughts impacting hydroelectric generation. While other categories behaved predictably, cost-push infla
October 2, 2024 2:22 PM UTC
Moody's upgraded Brazil's rating to Baa1, one level below investment grade, citing growth and structural reforms like tax and labor reforms. While Brazil's fiscal framework still faces challenges, adherence to it could stabilize the Debt/GDP ratio. Analysts were surprised by the upgrade, but maintai
October 2, 2024 9:36 AM UTC
Israel will likely counteract Iran, which will prompt a further missile attack by Iran. However, our bias remains that Israel main aim is to have a buffer zone in southern Lebanon up to the Latani river and not fight a prolonged war with Iran. This limits the economic fallout globally and on oil
October 1, 2024 2:10 PM UTC
The Brazilian Central Bank's latest report highlights stronger-than-expected economic growth of 1.4% in Q2 and a positive output gap, raising inflation risks. While non-core inflation decreased, core measures like services inflation remain sticky. Credit growth continues to be robust, but fiscal pol
September 26, 2024 8:00 AM UTC
USD strength is ebbing across the board, which provides a positive force for most EM currencies on a spot basis. However, where inflation differentials are large, the downward pressure will remain in 2025 e.g. Turkish Lira (TRY). Where inflation differentials are modest against the U.S., but
September 25, 2024 1:44 PM UTC
The Brazilian Central Bank raised the policy rate by 25 bps to 10.75%, citing stronger-than-expected economic activity and deteriorating inflation expectations. The committee highlighted rising inflationary pressures, especially in wages and credit growth. While future rate hikes are likely, no forw
September 25, 2024 7:30 AM UTC
· The U.S. economy is slowing, with the critical question being whether this is a soft or harder landing. Our broad analysis leaves us inclined to the soft landing view into 2025, though we shall watch real sector data closely over the next 3-6 months to check the trajectory. Else
September 24, 2024 12:54 PM UTC
· Brazil and Mexico started to diverge in terms of growth. While we see Brazil GDP growing above 3.0% in 2024 (pushed by the internal demand), we see Mexico’s growth decelerating to 1.3%, due to weaker demand from U.S. and contractionary monetary policy. In 2025, we see Brazil growing
September 24, 2024 8:30 AM UTC
• We now forecast 5450 for the S&P500 for end 2024, but could see a move to 5200/5000 in the next 3-6 months as volatile data keeps the soft v hard landing debate alive. On our baseline of a U.S. soft landing, we would see the S&P500 at 5600 by end 2025. The tech sector is still really i
September 19, 2024 12:50 PM UTC
The Brazilian Central Bank (BCB) raised the policy rate to 10.75%, signaling more hikes due to domestic pressures, including stronger economic activity and de-anchored inflation expectations. Despite global uncertainties, the decision reflects concerns about Brazil's positive output gap and fragile
September 15, 2024 10:30 AM UTC
Uncertainty about whether the U.S. economy will have a soft or hard landing is growing as the market approaches Q4. This is shaping the debate regarding the scale of easing through the remainder of 2024 and 2025 by the Fed. European easing is underway, but how much further will central ba
September 11, 2024 10:31 PM UTC
In August, Brazil’s CPI remained stable at 0% month-over-month, with the year-over-year rate dropping to 4.2% from 4.5% in July. This stability was driven by declines in the Housing group and food prices. Education and household expenditures increased by 0.7%, while the Transport group stayed unch
September 3, 2024 3:07 PM UTC
Brazil's Q2 GDP grew 1.4% (q/q), surpassing expectations, driven by strong industrial growth and robust internal demand. Investment increased by 2.1%, while external demand lagged due to rising imports. Agriculture declined due to floods, but services grew steadily. With internal demand as the key g
August 30, 2024 2:19 PM UTC
Brazil's Q2 2024 GDP is expected to grow 1.0%, driven by strong domestic demand and recovery in Services, Construction, and Mining. Despite analysts predicting a slowdown, fiscal stimuli and election-related spending have fueled growth. However, concerns remain whether this growth is sustainable or
August 28, 2024 1:42 PM UTC
Despite the market's push for a rate hike by the Brazilian Central Bank (BCB), we believe the current policy rate of 10.5% is sufficiently restrictive to ensure inflation converges. However, de-anchored inflation expectations, fiscal concerns, strong economic activity, and a new BCB president desiri
August 19, 2024 1:24 PM UTC
The Brazilian economy outperformed expectations in Q2, with a 1.1% growth (according to monthly data) driven by industrial production and strong household demand. This strength likely stems from the fiscal push in late 2023, though a slight deceleration is anticipated in the second half of 2024. Wit
August 14, 2024 3:35 PM UTC
Global market turbulence has had a spillover impact into EM, but also some EM assets have benefitted from rotation away from the U.S. What are the prospects in the coming months?
We see scope for a 2nd wave of U.S. equity and Japanese Yen (JPY) correction, which are a mixed influence for EM assets
August 9, 2024 3:14 PM UTC
Brazil's CPI rose by 0.38% in July, pushing the Y/Y rate to 4.5%, the upper limit of the Central Bank's target. The increase was driven by rising transport costs, especially gasoline and airfare, while food prices fell. Despite this, uncertainty remains about the economy's potential overheating, wit
August 6, 2024 2:55 PM UTC
The Brazilian Central Bank kept the policy rate at 10.5%, emphasizing a hawkish stance amidst global uncertainties and risk aversion. Inflation is projected at 3.2%, above the 3% target. The board remains cautious, with potential rate hikes if the economic situation worsens. A rate cut may be possib
August 5, 2024 3:13 PM UTC
The Brazilian CPI is expected to rise by 0.3% m/m in July, pushing Y/Y CPI to 4.4%. This increase is mainly due to higher gasoline prices affecting the Transport and Housing groups. Inflationary risks are emerging, with strong economic activity and sticky service inflation, but a policy rate cut rem
August 1, 2024 1:45 PM UTC
The Brazilian Central Bank (BCB) kept the policy rate unchanged at 10.5%, with a hawkish tone highlighting risks. Strong domestic growth and employment data persist despite monetary tightening. Inflation expectations for 2024 and 2025 are at 4.1% and 4.0%, respectively, above the 3.0% target. Fiscal
July 23, 2024 4:07 PM UTC
The Brazilian government will implement BRL 15 billion in contingency expenditures to meet fiscal targets, aiming for a 0.25% GDP primary deficit in 2024. This move, though addressing fiscal issues, pursues the lower target band and may undermine fiscal credibility. The contingency is due to revenue
July 17, 2024 6:52 PM UTC
We decomposed inflation in Brazil and Mexico using a Vector Autoregressive (VAR) Model, focusing on Imported Inflation, Demand, Supply, and Monetary Policy. Our analysis from 2003 to 2024 for Brazil and 2005 to 2024 for Mexico shows Brazil's inflation was primarily driven by supply and imported infl
July 10, 2024 5:11 PM UTC
The IBGE's June CPI figures show a 0.21% monthly increase, below market expectations. The Y/Y index rose to 4.2%, driven by increases in potatoes, milk, and coffee. The floods in the South had a minimal impact. Health and Housing saw modest rises, while core CPI remained stable. Despite potential ri
July 3, 2024 1:29 PM UTC
From 2012 to 2019, Brazil’s labor force participation grew, peaking at 63.7% in December 2019. Post-pandemic, it has fallen to 62.1%, influenced by early retirements, fiscal aid, and demographic shifts as more people enter age groups with lower participation. Intragroup effects mainly drive partic
July 1, 2024 8:05 AM UTC
Enhancing fiscal credibility is key post-election in India and S Africa, but also for Brazil. India, will do this in the 3 week of July, but S Africa needs to move from ANC/DA led coalition optimism to reality quickly. Brazil needs to stop the vicious circle of sentiment building up on fiscal slip
June 27, 2024 1:28 PM UTC
The Brazilian government has revised the BCB's inflation targeting framework, effective January 2025, to a continuous target system. If inflation exceeds the target bands for six consecutive months, the BCB must explain the discrepancy. The 3.0% target with 1.5% bands remains unchanged, alleviating
June 26, 2024 1:32 PM UTC
The Brazilian Central Bank maintained the SELIC rate at 10.5%, emphasizing a unanimous, hawkish stance on inflation. Markets question BCB's inflation control with upcoming leadership changes. External uncertainties, domestic consumption surprises, and rising inflation expectations were highlighted.
June 25, 2024 10:15 AM UTC
• The global economy is showing signs of healing, as inflation comes back towards targets and growth recovers momentum in some economies. Nevertheless, the cyclical headwind of lagged monetary tightening remains in DM countries, and will likely be one of the forces slowing the U.S. economy
June 25, 2024 8:05 AM UTC
We see Fed rate cuts from September starting to soften USD strength into year end and 2025. Beneficiaries will include currencies with inflation moving towards target and high real rates or, alternatively, undervalued currencies. This should benefit the Brazilian Real (BRL) and Indonesian Rupiah
June 25, 2024 7:05 AM UTC
• U.S. equities are overvalued and waiting for earnings growth to catch-up, which leaves the market choppy, directionless and vulnerable to intermittent 5% corrections. Our forecast slowing of the U.S. economy before Fed rate cuts or nervousness about the post-election prospects are potenti
June 24, 2024 6:00 PM UTC
· Brazil and Mexico growth will decelerate from the growth rates in 2023. The stronger basis of comparisons in 2023 and the tight monetary policy will diminish growth during 2024. Brazil robust Agricultural growth will not repeat in 2023 while Mexico is on the limit of growing due to a
June 19, 2024 10:17 PM UTC
The Brazilian Central Bank kept the policy rate at 10.5%, citing economic uncertainty and a need for caution. Inflation expectations for 2025 are 3.8%, above the 3.0% target. Political interference concerns persist, but the unanimous decision indicates a technical approach. The BRL's depreciation ma
June 17, 2024 2:34 PM UTC
The Brazilian Central Bank (BCB) is expected to maintain the SELIC rate at 10.5% amid external sector volatility, stubborn service inflation, and deteriorating inflation expectations. A hawkish majority on the board suggests a pause despite potential for cuts. Risks include rising food prices post-f