Financial conditions became tighter and impacted output during 3Q18.
Activity was in line with our 3% growth forecast in 3Q18
Compared to September 2017, core sales went up 0.1%
Compared to September 2017, core sales went up 0.1%.
The downgrade was due to deterioration of debt profile, growth perspectives and dynamic of inflation
We expect economic activity to grow 2.0% in 2018, as manufacturing exports recover (benefited by growth in the U.S.)
The median GDP growth expectations remained stable at 1.36% for 2018, and 2.50% for both 2019 and 2020.
We expect inflation to decelerate to 4.4% for the end of this year
Adjusted by calendar effects, industrial production grew 2.6% year-over-year, taking the 3Q18 growth rate to 1.3% year-over-year.
Our preliminary forecast for the IPCA in November is a 0.05% increase
Headline inflation slowed down to 4.90% year-over-year in October, with core inflation accelerating somewhat to 3.73% year-over-year.
Given this backdrop, the Copom will probably leave its base rate unchanged at 6.5% pa in its December 12 policy meeting
The biggest upward contributions during the month came from transportation (0.17 p.p.) and food and beverages (0.15 p.p.).
Strong service performance continues to offset weakening in remaining non-mining activity
The Copom will probably leave its base rate unchanged at 6.5% pa in its December 12 policy meeting.
Industrial production should rebound in the coming months
The monthly GDP proxy (Imacec) grew 2.3% year-over-year in September, surpassing both Bloomberg market consensus and our forecast of 2.0%.
We will learn more about the Copom’s thinking with the release of the meeting minutes on Tuesday
Compared to September 2017, output fell 2.0%.
The statement brings few but relevant changes compared with the previous edition.
Informal jobs resumed their influence on employment gains
Compared to 3Q17, unemployment receded 0.5 p.p.
The decision on the airport changes our monetary policy rate and exchange rate outlook
The result came in close to the numbers shown in recent polls
The result came in close to the numbers shown in recent polls.
This was the fifth consecutive unanimous decision.
Datafolha and Real Time Big Data show similar results
In the previous Datafolha poll, Jair Bolsonaro had 59% (50% of total votes) and Fernando Haddad 41% (35%).
The result doesn’t change the outlook of a much better central government primary result than the BRL -159 billion target
The survey was conducted between October 21 and 23
In the previous Ibope poll, Jair Bolsonaro had 59% (52% of total votes) and Fernando Haddad 41% (37%).
We expect a primary deficit of 2.6% of GDP this year, compared with a 2.7% target
The biggest deviation from our call was caused by food consumed at home, as the result was lower than other price surveys suggested.
Guido Sandleris stated the balance-sheet of the central bank is sound.
The most recent poll, conducted by Datafolha, indicated Jair Bolsonaro (PSL) with 59% of valid votes and Fernando Haddad (PT) with 41%
Jair Bolsonaro is rejected by 41% of the electorate, and Fernando Haddad by 54%.
We see the policy rate at 3.75% by the end of 2019 with the next rate hike coming in 1Q19
The rate hike is coherent with the central bank’s messaging since the September
Brazilian economy has been improving since June, albeit at a weak pace
The index is now 1.3% higher than pre-stoppage levels (February-April average).
Jair Bolsonaro is rejected by 35% of the electorate, and Fernando Haddad by 47%
Compared to the year-earlier period, it climbed 2.7%.
In our view, the result benefitted from withdrawals from accounts held under PIS/PASEP programs
In the previous Ibope poll, conducted before the first round, Jair Bolsonaro had 52% (45% of total votes) and Fernando Haddad 48% (41%).
In our view, the result benefitted from withdrawals from accounts held under PIS/PASEP programs.
The simulation shows Jair Bolsonaro (PSL) winning with 58% of the valid votes, against Fernando Haddad (PT) with 42%
The simulation shows Jair Bolsonaro (PSL) winning with 58% of the valid votes, against Fernando Haddad (PT) with 42%.
Inflation increased 0.42% month-over-month, below our forecast of 0.48% and slightly above market expectations of 0.41%
Inflation increased 0.42% month-over-month, below our forecast of 0.48% and slightly above market expectations of 0.41%.
Overall, inflationary pressures remain controlled with the core measure recording a more moderate 0.2pp rise to a still low 2.1%
The gap between the two candidates in the first round was 17pp and the rejection rate of both appeared at similar levels in recent polls.
The gap between the two candidates in the first round was 17pp
Second round simulations show Jair Bolsonaro technically tied with Fernando Haddad (44% to 43%, respectively)
According to the latest Datafolha poll, Jair Bolsonaro (PSL) leads the presidential race with 35% of voting intentions
However, one board member voted for a 25-bp increase.
Second round simulations show Jair Bolsonaro technically tied with Fernando Haddad (41% to 43%, respectively)
Second round simulations show Jair Bolsonaro technically tied with Fernando Haddad (41% to 43%, respectively).
Fernando Haddad's rejection rate increased to 41%
Second round simulations show Jair Bolsonaro technically tied with Fernando Haddad
Second round simulations show Jair Bolsonaro technically tied with Fernando Haddad
Second round simulations show Jair Bolsonaro losing to Fernando Haddad
Second round simulations show Jair Bolsonaro losing to Fernando Haddad.
We expect the Copom to keep the base rate at 6.50% pa in October, but we will closely monitor the evolution of the exchange rate and inflation expectations
The growth rate of the monetary base (monthly average) will be set at zero from October 2018 to June 2019.
The new package comes after the government announced more ambitious fiscal deficit targets
According to the BCB, the forecasts were affected by the BRL depreciation in the third quarter of 2018.
A possible explanation behind Caputo’s resignation could be related to disagreements with the IMF on exchange-rate interventions
Argentina is eligible to receive USD 13.4 billion during the remaining months of 2018 and USD 22.8 billion in 2019.
For now we expect the Copom to leave rates unchanged at 6.5% in October, but we do recognize that the scenario is changeable
A gradual Selic rate hike would follow from additional worsening of inflation expectations and/or of the balance of risks thereto.
Over 12 months, the current account deficit widened to USD 16 billion or 0.8% of GDP.
Our preliminary forecast for the headline IPCA in September is 0.46%, with the year-over-year rate accelerating to 4.51%.
We expect economic activity to grow 2.0% in 2018
Year-to-date inflation reached 3.23%, while the year-over-year change decelerated to 4.28%.
The 2Q18 figure was boosted by a positive calendar effect (Easter Holidays).
Second round simulations shows Jair Bolsonaro technically tied with all candidates
The statement does not commit to any move in October, but paves the way for one, in case it proves necessary.
Second round simulations shows Jair Bolsonaro technically tied with Ciro Gomes (36% vs 38%, respectively) and Fernando Haddad (39% vs 36%, respectively)
The trade deficit came in at USD 557 million, closer to market consensus (USD 600 million forecast), than our USD 719 million estimate.
Second round scenarios show Jair Bolsonaro improving his voting intentions
Second round simulations shows Jair Bolsonaro technically tied with Fernando Haddad, Marina Silva and Geraldo Alckmin, and losing to Ciro Gomes (38% to 45%)
Compared to the year-earlier period, it rose 1.6%.
Given the poor performance of recent months, the quarterly change slipped back to negative levels after 18 months of gains
Both polls show the same result
Compared to one year ago, core sales declined 1.0% and experienced the first negative reading under this metric in 16 months.
Jair Bolsonaro (PSL) leads the presidential race with 27% of voting intentions, followed by Ciro Gomes (PDT) with 12%.
The poll shows Jair Bolsonaro (PSL) with 26% of voting intentions (from 22% in the previous Ibope poll)
The poll shows Jair Bolsonaro (PSL) with 26% of voting intentions (from 22% in the previous Ibope poll), followed by Ciro Gomes (PDT) with 11% (from 12%)
In this scenario, blanks, nulls and undecided voters dropped to 22% of the electorate, coming from 28% in the previous poll
Overall, inflationary pressures remained controlled, with headline inflation ticking down 0.1pp to 2.6% in Chile.
Our preliminary estimate for the IPCA in September is a 0.40% hike that would push the year-over-year rate up to 4.4%
Year-to-date, the IPCA went up 2.85% and the year-over-year change decelerated to 4.19%.
This is the first poll since the recent decision by the Supreme Electoral Court (TSE) to bar Lula from the election
Our baseline scenario relies on the expectation that trade tensions will ease in the months ahead
Growth in the month was 3.3%, above the Bloomberg market consensus of 2.9% and our 2.5% call.
At current real exchange rate levels, the net public debt will likely end this year at 56% of GDP.
The board is alert to mounting external risks, but remains upbeat with the domestic economic outlook.
The electoral court will give the PT ten days to present a substitute candidate
The treasury will target a primary fiscal deficit of 0% of GDP in 2019.
On a year-over-year basis, GDP growth has been decelerating.
The still turbulent external environment (including uncertainty over reforms in Brazil) is also a key obstacle for stabilization
The court may not review his candidacy tomorrow, but still rule on whether he can or not ask for votes in the television and radio propaganda
The policy rate (the 7-day Leliq, a bill issued by the monetary authority) is now at 60%.
The daily average of new loans rose 0.5% mom/sa in real terms for the non-earmarked segment and increased 2.7% for earmarked loans.
The result reinforces the outlook of weak underlying growth shown by a broad set of economic indicators
The result reinforces the outlook of weak underlying growth shown by a broad set of economic indicators.
Trump said that they will terminate NAFTA deal and replace it with the one agreed with Mexico
The worsening in the current account was accounted by a deterioration in the trade, services, and net income deficit
Over 12 months, the current account deficit widened to USD 15 billion (or 0.8% of GDP).
Our preliminary forecast for the headline IPCA in August is -0.02%
The worsening in the current account was accounted by a deterioration in the trade, services and net income deficits.
The next readings may continue to be negatively influenced by tighter financial conditions and higher economic uncertainty
Year-to-date inflation reached 3.14%, while the year-over-year change decelerated to 4.30%.
The sectorial breakdown show gains in the service and agricultural sectors, while commerce industry receded at the margin.
In the scenario without Lula (PT), Jair Bolsonaro (PSL) leads the presidential race with 20% of voting intentions (coming from 17% in the previous Ibope poll)
The treasury reported a primary deficit of ARS 14.3 billion in July.
GDP increased 5.3% year over year, just above the 5.2% derived from the monthly GDP proxy (Imacec).
Two nationwide polls are expected to be released today
In our view, a successful renegotiation of NAFTA would likely mean an end to the tightening cycle.
The main highlights will come from the political side next week.
The minutes reaffirmed that the board sees current inflationary pressures as transitory (restricted to non-core prices).
The result reflects the normalization on major monthly indicators
The continued narrowing is explained by the energy balance improvement
The result reflects the normalization on major monthly indicators.
In our view, recent measures will only be sufficient to stabilize the peso and other asset prices if strains on external financial markets diminish
The USD 719 million trade deficit in June was smaller than Bloomberg market consensus' of USD 800 million and our USD 917 million forecast.
Our estimate for core retail sales is a 0.5% increase.
The policy rate (the 7-day Leliq, a bill issued by the monetary authority) is now at 45%.
Broad retail sales advanced 2.5% mom/sa, topping the median of market expectations (2.1%) and our call (1.6%).
We expect inflation to decrease to 4.0% by the end of this year
Our preliminary estimate for the IPCA in August is a 0.03% move that would push the year-over-year rate down to 4.32%
Headline inflation came in at 4.81 year-over-year in July, while core inflation remained practically unchanged
Inflation decelerated sharply from 1.26% in June, showing the waning impact of the cargo transportation stoppages and the red mode in the tariff flag system
We do not see room for interest-rate cuts before the market stabilizes more clearly
The rate was set at 40%, the same level of the previous policy rate (center of the 7-day repo corridor).
The annual Imacec (monthly GDP proxy) variation was 4.9%, slightly below Bloomberg market consensus’ (5.3%) and our forecast (5.2%)
The annual Imacec (monthly GDP proxy) variation was 4.9%, slightly below Bloomberg market consensus’ (5.3%) and our forecast (5.2%).
This is the first time that Alckmin leads a poll in the 2018's elections
In our view, a successful renegotiation of NAFTA would likely mean an end to the tightening cycle
The board seems comfortable with the current policy rate level, signaling that under current conditions there is no need for additional cut
We will learn more about the rationale for this decision with the release of the Copom minutes on Tuesday
In the statement, the central bank highlighted that recent upside surprises of inflation were due to transitory factors.
The authorities undertook the usual factual updates, noting the effects of the transportation sector disruption on activity and inflation.
Our forecasts for the average unemployment rate are 12.4% in 2018 and 12.2% in 2019
Keeping this favorable scenario consistently depends strictly on the approval of reforms
The unemployment rate is 0.6 p.p. lower than in June 2017.
The general government’s gross debt went up to 77.2% of GDP in June.
We do not see the board in any haste to modify the policy rate
Over 12 months, the current account deficit widened to USD 13.9 billion (0.7% of GDP)
Compared to our forecasts, revenues came a little lower and expenditures mostly in line the expected.
Over 12 months, the current account deficit widened to $13.9 billion, or 0.7% of GDP.
The deficit was in line with our forecast (USD 400 million) and below market expectations (USD 550 million, according to Bloomberg)
The trade balance showed a deficit of USD 382 million, almost half the amount registered in the same month of last year (USD 750 million).
We see downside risk to our 0.5% growth forecast for this year
Activity dropped by 5.8% YoY in May (vs. market expectations of a 1.3% contraction and our forecast of a 1.0% decline).
The monthly GDP proxy (IGAE) expanded 2.2% year-over-year in May, below our forecast (2.8%) and in line with median market expectations
The monthly GDP proxy (IGAE) expanded 2.2% year-over-year in May, below our forecast (2.8%) and in line with median market expectations.
Our preliminary forecast for the headline IPCA in July is an increase of 0.28%
Regulated prices were behind the biggest deviation from our forecast.
If confirmed, the allieance will take the share of TV and Radio campaign time of the PSDB alliance to almost 50%.
We expect the report to shed light on the monetary policy framework
The nominal deficit (now including the interest bill) fell to 5.3% in June.
The results indicate that voting intentions between the two pre-candidates is broadly unchanged, with Bolsonaro’s lead still at around 3p.p.
Marina Silva’s voting intentions seem to be declining a bit, now at 10%
The result reflects the widespread decline as a result of truckers’ stoppages in the last two weeks of May
CPI rose 3.7% from May to June, slightly above the Bloomberg market consensus forecast of 3.6%.
The result reflects the widespread decline observed in industrial production, retail sales and services real revenues.
The breakdown shows mom/sa declines in 9 out of 12 sectors
The breakdown shows mom/sa declines in 9 out of 12 sectors, with transportation as the highlight.
Eight out of 10 broad retail components posted seasonally-adjusted monthly drops in May
The dynamics has been heavily affected by the truckers’ stoppage between May 21-29
Broad retail sales dropped 4.9% mom/sa, missing the median of market expectations and our call (both at -3.2%).
The dynamics has been heavily affected by the truckers’ stoppage between May 21-29.
We do not see room for interest-rate cuts before the market stabilizes more clearly
The strong growth suggests some payback from the weakness in May.
The decision was in line with comments by some board members prior to the meeting that pointed to the limited room for additional rate cuts
The consumer price index IPCA climbed 1.26% in June, below our estimate (1.35%) and near the median of market expectations (1.28%)
The sharp decline was caused by the trucker’ stoppage, which affected supply and production chains in the final two weeks of the month
The minutes suggest the next decision is more open
Compared to May 2017, the indicator was down by 6.7%
Over 12 months, the trade surplus shrank to $61 billion
The median GDP growth expectations remained stable for 2018 after eight consecutive weekly declines
The result came in below our estimate ($6.2 billion) and market’s consensus ($6.6 billion)
Andrés Manuel López Obrador (AMLO) won Mexico’s presidential elections
The anti-establishment candidate Andrés Manuel López Obrador (AMLO) won Mexico’s presidential elections
The level of blank/null/undecided voters is significantly higher
In its fourth monetary policy meeting of the year, the central bank of Colombia kept the monetary policy rate at 4.25
We continue to believe that the government will meet its primary-deficit target for the year (2.2% of GDP or BRL 161 billion).
The daily average of new non-earmarked loans declined 1.0% mom/sa in real terms and delinquency fell 0.1 p.p. to 3.2%
Overall seasonally-adjusted delinquency fell 0.1 p.p. to 3.2%.
The National Monetary Council (CMN) announced that the inflation target for 2021 is 3.75
Over 12 months, the current account deficit widened to USD 13 billion or 0.65% of GDP.
The number is down from 4.5% this year, 4.25% in 2019 and 4.0% in 2020.
After a robust performance in 1Q18, the economy weakened somewhat in April.
Over 12 months, the current account deficit widened to USD 13 billion or 0.65% of GDP.
The apparently high print, nevertheless, is inflated by a big calendar effect.
Mexico’s central bank increased its policy rate by 25-bps as expected by us and the majority of market analysts
In justifying the decision, the central bank mentioned a deterioration of the balance of risks for inflation.
In the reference scenario, which assumes stable Selic and FX rate, inflation forecasts are set at 4.2% in 2018 and 4.1% in 2019.
Growth was consistent with market expectations (according to the Bloomberg survey) and with the official monthly GDP proxy (EMAE).