The index decreased at the margin
Retail stands out positively during the month
July’s IPCA inflation below expectations. Core inflation measures remain on a benign path.
Brazil in maps: starting with this edition, we will feature state-level comparative maps.
Gains topped expectations and were widespread across sectors
Widespread growth across sectors.
We forecast a wide trade surplus this year as imports fall more sharply than exports
In Brazil, cases are growing faster in smaller cities, while capitals have a less explosive curve of new cases, and declining new deaths
Fiscal accounts will deteriorate in 2020
Seasonally adjusted unemployment rate reaches 12.6% in May
Overall delinquency slid 0.1 p.p. to 3.1% in seasonally adjusted terms.
The QIR shows forecasts that are consistent, in our view, with the maintenance of the Selic rate at a low level for a prolonged period.
IPCA-15 close to zero in June. Core inflation measures below expectations.
Continuing declines in the current account deficit are expected in the coming months.
Data on new cases and new deaths rose again in the country, after showing some stability.
The Copom minutes reinforce the perception that the authorities will not move in the next policy meeting
The statement did not clearly close the door to additional easing, but its tone suggests that this is not the base case .
Over the last weeks, new cases and new deaths have been broadly flat in Brazil
Available data so far indicate that economic activity indicators have reached a low in April
Developed countries continue to recover, while Brazil gains some traction again.
IPCA posted a 0.38% deflation in May. Core inflation measures remain subdued.
Copom will take Selic rate to 2.25% p.a. and may signal an interruption of monetary adjustment for now.
Important differences within sectors
The improvement is clear only in the northern region. To confirm a trend reversal, other regions must follow.
The May trade balance continued to show the slowdown in global trade and, in particular, the decline in domestic economic activity
The consolidated primary deficit over 12 months increased to 2.3% from 0.9% of GDP.
The result was in line with expectations (mkt: -1.5%; Itaú: -1.4%)
The overall delinquency rate was virtually stable at 3.2% in seasonally adjusted terms.
Seasonally adjusted unemployment rate reaches 12.1% in April.
We expect fiscal accounts to continue to deteriorate in 2Q20.
Brazil leads the group of emerging countries with accelerating outbreaks, followed by Peru, Mexico, India and South Africa, among others.
Lower prices for fuel and airline tickets contributed to the deflation in the month. Core inflation measures remain low.
In the coming months, we expect new declines in the current account deficit.
Russia and Brazil now occupy, respectively, the second and third global position in terms of total cases, only behind the U.S.
In Brazil, the death ratio is increasing fast in Rio. North and NE regions continue to see strong per capita increases of new cases and deaths.
Supermarket sales prevent a sharper decline
We understand that the focus on the inflation target and on falling expectations points towards another 75-bp move in the next meeting
April's IPCA posted a 0.31% monthly deflation, leading the 12-month reading to 2.4%.
The Copom cut the base rate to 3.0% pa (we expected a more modest move, to 3.25%) and signaled one final cut in June.
Widespread contraction seen in the first month of social distancing
Given the deterioration of the economic outlook, another 50bps cut this month is likely
Larger-than-expected exports in the last week of the month yield stronger trade surplus in April
We expect the Copom to reduce the Selic rate by 50 bps, to 3.25% pa, and to signal caution regarding additional movements.
Fiscal result will worsen in 2020
Drop in the workforce prevents higher unemployment
The outbreak in Brazil is still more concentrated in the Southeast, but spreading fast.
Overall delinquency increased by 0.2 p.p. to 3.2% in seasonally adjusted terms
IPCA-15 falls -0.01% in April with core inflation measures lower than expected
$868 million current account surplus in March due to surprises in both services and income accounts
Brazil seems to have a “seasonal” effect: softer data during weekends, with jumps on Tuesdays.
March’s IPCA inflation came in at 0.07% mom, slightly below market expectations
Numbers in Brazil are evolving more favorably, but this may be caused by reporting problems.
Supermarket sales reinforce positive monthly result
Positive capital and intermediate goods production
The U.S. leads new cases, while Europe seems about to peak.
Stronger-than-expected exports yield higher-than-antecipated trade surplus in March
Primary result will temporarily deteriorate due to coronavirus crisis.
Equal growth in employment and workforce prevents a decline in unemployment
Overall delinquency remained stable at 3.0% in seasonally adjusted terms.
The inflation report shows forecasts that are consistent, in our view, with further rate cuts in 2020
IPCA-15 increases 0.02% in March. We forecast a 0.07% increase for the CPI at the end of this month.
Recent numbers: cases continue to grow worldwide, driven by Europe and the U.S.
In the coming months, the current account deficit is expected to recede due to slower economic activity and a weaker exchange rate.
We expect the Copom to cut again once the market situation calms down, taking the Selic to 3.25% p.a., not necessarily in the next meeting.
The Copom reduced the Selic rate to 3.75% pa and stated that, for now, they see base rate stability as adequate.
We expect the Copom to reduce the Selic rate by 25bps to 4.0% per year.
Core inflation measures remain at comfortable levels.
Capital goods production was the main positive highlight.
Consumer spending and investment on the rise, exports and government spending decline in 2019
The trade balance in February was positive by $3.1 billion, beating our forecast and market estimates
Participation rate supports the decline in unemployment during the month
Largest primary surplus for the month
Overall delinquency was virtually stable at 3.0%.
The retreat in the service and income deficits could not offset the decline in trade balance in January
IPCA-15 increases 0.22% in February. Core inflation measures remain subdued
Widespread weakness
Widespread weakness in the retail sector
The text points to unchanged interest rates for the time being – we expect the Selic rate to end the year at the present 4.25%.
IPCA below expectations in January
The Monetary Policy Committee (COPOM) cut the Selic rate to 4.25% p.a. and decided to interrupt the easing cycle.
Investment-related components cool down in December
Capital goods imports were inflated by transactions involving oil-drilling rigs in the final week of the month
We expect the Copom to cut the Selic rate by 25bps to 4.25% p.a. in its February 4-5 meeting.
Participation rate supports the decline in unemployment in late 2019
Fiscal prints are gradually improving
Interest rates and the average spread declined
The current account posted a $5.7 bn deficit in December, leading the 2019 deficit to $50.8 bn (2.8% of GDP)
IPCA-15 increases 0.71% in January. We forecast a 0.29% increase for the CPI at the end of this month.
Widespread declines in components
Advance in core retail sales and drop in the broad concept
IPCA rises 1.15% in December and closes 2019 at 4.31%
Manufacturing recedes after three consecutive monthly increases
The trade surplus declined in 2019, but remained at a historically-high level.
The consolidated primary deficit over 12 months receded to 1.2% of GDP from 1.3% in the previous month.
Unemployment remains high by historical standards
Overall delinquency rose 0.1 p.p. to 3.0% in seasonally-adjusted terms.
IPCA-15 rises 1.05% in December due to higher beef prices
The main surprise came from the equipment rental account, which is typically volatile. At the margin, the current account deficit is narrower.
The IR reinforces our belief that the monetary authority will see room to reduce the Selic rate again.
While the written text indicates a somewhat hawkish tone, we understand that inflation forecasts allow lower interest rates ahead.
Widespread growth in October.
The statement does not commit to additional rate cuts, but does not rule them out either.
Retail sales advance in October
We expect the Copom to cut the Selic rate by 50 bps at next week’s meeting, to 4.5% p.a.
We expect the Copom to cut the Selic rate by 50 bps at next week’s meeting, to 4.5% p.a.
Manufacturing accelerates at the margin
Data reinforce a gradual pickup in economic activity.
The significant revision in exports shows a still-high trade surplus, albeit lower than in 2018
The underemployment rate continues to recede, standing now at 24.1% with seasonal adjustment.
Accumulated over 12 months, the consolidated primary deficit remained at 1.3% of GDP.
The average spread and interest rate declined.
Wider-than-expected current account deficit in October. Due to the revision of external sector statistics, the CAD reached 3.0% of GDP.
IPCA-15 increases 0.14% in November. Core inflation measures remain subdued
Data reinforce positive trend in consumer spending
PM-Itaú climbed 0.6% in 3Q19
12 month IPCA inflation reaches 2.54% in October
The document reinforced the expectation of an additional 50-bp cut at December’s meeting, but indicated caution going forward.
The item "printing and copies" stood out by falling 28.6% mom/sa.
October figures reinforce the weakening trade surplus in the second half of 2019
2019 primary result should be better than the target
Unemployment remains high by historical standards in September
The Copom delivered the widely expected decision, cutting the Selic rate by 50 bps, and mentioned another 50-bp rate cut ahead, in December.
Overall delinquency was stable at 3.0% in seasonally-adjusted terms.
We believe the Copom will cut the Selic rate to 5.0% at its next week's meeting
Narrower Current Account Deficit in September due to smaller Income Deficit
IPCA-15 rises 0.09% in October. Core measures remain on a benign path
A second gain in monthly GDP in 3Q19
Retail sales remain on an upward trend
IPCA falls -0.04% in September with core inflation measures lower than expected
The seasonally-adjusted annualized quarterly moving average slid to $31.1 billion from $34.7 billion in August.
Recovery in mining/extraction, while manufacturing remains slow.
Fiscal challenges remain.
The underemployment rate reached 24.3%, matching the August 2018 reading.
The document indicates that the Selic rate may remain at a new low of 5.0% for a lengthy period, rising only from 2021 onward.
The deliquency rate increased slightly to 3.1%, seasonally adjusted.
The minutes reinforced the likelihood of a 50-bp cut in October, but limited the indication of even lower interest rates, for now.
IPCA-15 rises 0.09% in September. Core measures remain on a benign path
The current account posted a $4.3 billion deficit in August, which was wider than our forecast (-$3.9 bn) and market estimates (-$4.1 bn).
The statement indicates that another 50-bp “adjustment” of the base rate is likely in the October meeting.
Monthly GDP goes up in early 3Q19
We believe the backdrop for our scenario of a continued easing cycle has not changed significantly since the last policy decision.
Result reinforces moderate expansion trend in consumer spending
The IPCA rises 0.11% in August, as expected
The data continue to suggest a slow pace of recovery in economic activity.
Trade surplus weakens due to the slowdown in global activity
Fiscal challenges remain
Unemployment remains high by historical standards
The uninspiring labor market dynamics amid pessimistic consumer sentiment mean private consumption would moderate ahead.
Construction sector performance was a positive highlight, increasing 1.9%.
Overall delinquency went up slightly by 0.1 p.p. to 3.1%.
Profit and dividend remittances and a weaker trade balance lead to a wider current account deficit in July.
IPCA-15 rises 0.08% in August. Core measures remain on a benign path
Result reinforces perception of weak economic activity
IPCA recedes to 3.22% in July. Core measures at comfortable levels
Consumption remains in a moderate recovery trend.
The minutes indicate another 50bps cut in September and we expect a Selic rate to reach 5.0% by the end of 2019
Stronger imports yield weaker-than-expected trade surplus in July
Weakness in investment-related components
Unemployment remains high by historical standards
The Copom reduced the interest rate by 0.50 pp and signaled an additional adjustment of the same magnitude at the next meeting.
Reforms are essential to fiscal rebalancing
New earmarked loans retreated 0.4%.
We expect the Copom to start a new easing cycle with a 50bps cut on July 31st
Larger-than-anticipated profit and dividend remittances were behind pressured the primary income balance in June
IPCA- 15 July rises 0.09%, below expectations. Core measures on a benign trajectory.
Result is consistent with weak growth in 2Q19
Broad retail sales (which include vehicles and construction material) advanced 0.2% mom/sa in May.
IPCA is virtually unchanged in June. Food, electricity and auto fuels posted a deflation during the month.
Only 8 out of 26 activities show monthly gains
In sum, June figures showed a lower trade balance at the margin, although the year-to-date reading remains high.
The public sector’s net debt widened to 54.7% of GDP.
Notwithstanding the latest decline, unemployment remains high by historical standards.
Central bank´s forecasts indicate new easing cycle in 2019.
Overall delinquency remained virtually unchanged at 2.9%, seasonally adjusted
The minutes reinforce our call that the Copom will resume easing in July, conditional on concrete progress in the reform front.
Deflation in food prices took the spotlight, with price drops for food consumed at home (-0.82%) and away from home (-0.33%).
Over 12 months, the current account deficit remains at a historically low level: 0.7% of GDP.
The statement opens the way for a resumption of monetary easing, provided there is “concrete progress” in the reform agenda.
Conditional on the pension reform approval, we now expect a decline in the Selic benchmark interest rate to 5.0% in 2019 and 2020.
For May, we expect, for the time being, PM-Itaú to remain stable.
Retail sales quarterly growth is slowing down.
IPCA rises 0.13% in May reinforcing a benign inflation scenario
Manufacturing is on a moderate recovery trend year-to-date.
Stronger exports and imports in May. Trade surplus reaches $ 6.4 billion.
Seasonally-adjusted unemployment declined 0.1 p.p. to 11.9%.
April’s result is a seasonally surplus
For 2Q19, our preliminary forecast is a modest GDP growth of 0.1% qoq/sa
Seasonally-adjusted delinquency slid 0.1 p.p. to 2.9%.
Seasonally-adjusted delinquency slid 0.1 p.p. to 2.9%.
Current account posts $62 million deficit in April and disappoints market expectations
IPCA-15 climbs 0.35% in May. Deflation in prices for food consumed at home stood out, while auto fuels put pressured the index
The minutes suggest the Copom is still comfortable with the level of the Selic rate, but we expect the BCB to cut rates again in September.
The result reinforces our call for a contraction of GDP in 1Q19.
Headline inflation accelerated on an annual basis pressured by food and fuels; but should begin a downward path from now on
Report reinforces scenario of a slight increase in consumer spending in 1Q19
The post-meeting statement suggests that the authorities are less sanguine on the state of economic recovery
The Selic rate will likely be kept at 6.5% p.a. in May´s Copom meeting
Result reinforces weakening trend in the industrial sector
Trade surplus remains at historically-high figures
Fiscal challenges remain significant