Itaú BBA - Evening Edition – Solid auto production in Brazil

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Evening Edition – Solid auto production in Brazil

March 11, 2019

Despite the strong increase in auto production, demand data remain weak for the month

Talk of the Day


According to Anfavea, auto production reached 257.2k in February, above our forecast (220k), marking the highest result for the month since 2014. In seasonally adjusted terms (our estimates), production increased 10.3% mom/sa (20.5% yoy). The 3-month moving average increased 2.7%.

Despite the strong increase in auto production, demand data remain weak, posting mixed results in February – while domestic sales increased 1.5% mom/sa, exports declined 3.8% in the same period.

Still on activity indicators, traffic of heavy vehicles (ABCR) rose 0.2% mom/sa in February (our seasonal adjustment) – the 3-month moving average increased 0.6%. In year-over-year terms, traffic of heavy vehicles rose 7.7%, benefited by a higher number of trading days in February than in the same month last year.

Also, the BCB released its weekly survey with market participants (Focus). According to the survey, the median of IPCA inflation forecasts for 2019 increased 2 bps, to 3.87%, and remained stable for 2020 and 2021 at 4.00% and 3.75%, respectively.

The median of GDP growth expectations for 2019 decreased 2 bps, to 2.28%, following the negative trend seen last week, when expectations fell 18 bps after the timid 4Q18’s GDP growth figures. For 2020, expectations increased 10 bps, to 2.80%, and did not change for 2021, remaining at 2.50%.

The year-end Selic rate expectations also remained flat at 6.5% for 2019 and at 8.0% for 2020 and 2021. The median of the forecasts for the exchange rate did not change for the three years horizon (2019-2021): at BRL 3.70/USD for 2019; at BRL 3.75/USD for 2020; at BRL 3.80/USD for 2021.

Tomorrow’s Agenda: February’s IPCA inflation will be released at 9:00 AM, for which we forecast a 0.42% monthly increase, leading the 12-month reading to 3.88% (from 3.78% in January).


Tomorrow’s Agenda: The statistics institute (INEI) will publish January’s trade balance, for which we forecast a USD 0.8 billion surplus. 

Fixed Income Strategy

CHILE, COLOMBIA: We are taking profits in our position received in Colombia’s 1-year local rate and paid in Chile’s 1-year local rate with a 15bps gain.

BRAZIL: Local rates in Brazil were the only ones in LatAm that did not see substantial declines last week, as the market remains uncertain about the pension reform process.
** Full story

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