IPCA-15 continues to indicate underlying inflation under pressure in June.
Current account surplus with trade balance as the main driver.
The June IR brought interesting studies on risks related to higher interest rates in the U.S and a decline in commodity prices and/or the exchange rate.
Daily pace is nearing 1.4 million shots in the country.
We now expect a 1.0 pp increase in the Selic rate at the August Copom meeting, and 6.5% p.a. at the end of the cycle.
The 7-day moving average declined 0.8 points, to 103.0.
The vaccination pace in Brazil reached the mark of 1 million per day, on a weekly average and considering the sum of first and second doses.
The Copom signaled another 75-bp hike in August, but indicated that the tightening pace may increase if expectations continue to go up
We expect the Copom to raise Selic by 75 bps, remove reference to partial normalization, and signal a hike of the same magnitude in August
In Brazil, new cases started to recede, but coming from very high levels.
Stronger-than-expected IPCA in May, and underlying inflation remains under pressure.
Widespread growth
Labor market continues to recover, with the number of formal employees back to the pre-pandemic level
New cases stop rising, but remain at high levels in Brazil.
Most segments drop at the margin
GDP rebounds to pre-pandemic level
Strong trade surplus due to increase in exports.
Medium-term challenges remain, though
Seasonally adjusted overall delinquency remained virtually stable at 2.1%.
IDAT-Employment points to 14.1% unemployment rate
The pressure of new pandemic waves on the health system may not be as intense as in the second wave.
Improvement in the current account due to the strong trade surplus driven by the increase in exports
Increases in new cases and hospital admissions in Brazil bring concern. In the rest of the world, India shows further signs of stabilization
.
Reopening in several states supports a sharp recovery of the economy. In the rest of the world, India shows some early signs of improvement.
Slightly-better-than-expected underlying inflation in April, with highlights to services prices.
The minutes suggests that the Copom will hike rates in June, by 75 bps, then slow down the pace towards a pause at 5.5% pa
Supermarket sales prevent a steeper monthly drop
Curves of new cases and deaths continue to fall in the country. In the rest of the world, India remains at center stage.
Despite a decline, output remains near pre-pandemic levels
Copom raises Selic by 75 bps and signals a new hike of equal magnitude in June, but still foresees partial normalization.
Stronger trade result, especially due to the substantial increase in exports
We believe the scenario remains consistent with the Copom signaling that it would be appropriate to repeat the 75-bp hike at the May meeting
Fiscal results slightly better in the last months
PNADC suggests slow recovery in employment
Seasonally adjusted overall delinquency slid by 0.1 p.p. to 2.2%.
Curve of new cases and deaths continue to recede in the country. In the rest of the world, the strong deterioration in India remains in focus.
April IPCA-15 below expectations. Underlying inflation a bit better than expected, with highlight for services.
The trade balance has been weaker at the margin, but this situation is set to be temporary.
Improvement in surge indicators is leading to easing social isolation measures in several states.
Regarding vaccination in the country, the daily pace is hovering around 770k doses, slightly up in April.
Vehicle sales boosted the broad retail index.
IPCA rises 0.93% in March pressured by vehicle fuels.
Coverage is close to 10% of the population
Industrial production remains at high levels, despite the drop at the margin.
With $24.5 billion exports and $23.0 billion imports in the month, the surplus was smaller than in March 2020.
Numbers worsen in Brazil, but there are signs of relief in São Paulo.
Employment continues to recover, led by informal jobs.
Fiscal rebalance challenge continues
Seasonally adjusted overall delinquency went up by 0.1 p.p. to 2.3%
The mid-month IPCA-15 inflation print was pressured by fuel prices, but underlying measures are still on the rise
In our view, the March 2021 inflation report is consistent with further interest rate hikes over the next Copom meetings.
The number of patients with respiratory symptoms has been falling in São Paulo, suggesting some relief for the health system of that capital
The minutes repeat the signal that the next move will be a 75-bp hike, which we expect to materialize.
From this edition onward, we will cover in more detail the progress of vaccination and the levels of hospital utilization in Brazil
The Copom decided to hike the Selic rate by 75bps and signaled the intention to repeat the current pace in the next policy meeting
In our view, the Copom will raise the Selic rate by 50bps to 2.50% p.a. at its next monetary policy meeting.
Widespread decline
Higher than expected February's IPCA inflation. Underlying goods inflation remains under pressure at the margin.
The outbreak reaches new highs in Brazil, leading states to tighten or renew recently implemented isolation measures
Rising production of capital goods
Significant recovery in 2H20
Both the number of new cases and new deaths accelerated again in Brazil, surpassing the record levels seen at the beginning of the year
Data from the past few months show a weaker trade balance. This phenomenon should be temporary
Employment continues to recover
A challenging fiscal rebalance ahead
Seasonally-adjusted overall delinquency remained virtually unchanged at 2.2%.
Arrival of new doses and inputs for local production in Brazil may improve the pace of vaccination ahead.
February's IPCA-15 close to expectations. Underlying goods inflation remains under pressure, but services already showing relief.
Arrival of new doses and inputs for local production in Brazil may improve the pace of vaccination ahead.
In addition to logistic factors, Chile has a deal to purchase shots from 4 different labs.
.
New deaths curve begins to follow the improvement trend in new cases.
Lower than expected IPCA in January, but underlying inflation remains pressured at the margin.
Lower than expected IPCA in January, but underlying inflation remains pressured at the margin.
The rate of vaccine rollout remains moderate
Low industrial inventories at the beginning of the year
Higher exports and falling imports by the end of the month were behind the surprise in relation to our scenario
.Fiscal challenge increased in 2020.
Employment is on the rise, but the unemployment rate remains in historically-high levels
.Seasonally adjusted overall delinquency remained virtually unchanged at 2.3%.
Current account deficit narrowed to 0.9% of GDP in 2020 due to wider trade surplus and smaller service and income deficits
The country reached the mark of 0.40% of the population already vaccinated, according to Our World in Data estimates.
The Copom minutes signal a possible imminent hike in the Selic rate. We now expect an increase of 25 bps at the March meeting.
IPCA-15 close to expectations, but with underlying inflation pressured at the margin.
The Copom left the base rate unchanged, at 2.0% pa, and, as expected, scrapped the forward guidance that precluded short-term rate hikes.
In the rest of the world, immunization campaigns continue to gain traction.
Retail sales sensitive to income lose steam at the margin
We believe that the Copom will withdraw its forward guidance, but it will keep the Selic rate at 2.00% p.a. at its next meeting.
In Brazil, vaccines await Anvisa’s approval, but new cases continue to increase.
The indicator came in higher than expected, and ended 2020 with an increase of 4.52%.
Industrial production enjoys a Strong recovery process.
In countries that have not yet started vaccinating, negotiations to start their own vaccination campaigns quickly are ongoing.
Exports as well as imports declined in 2020 due to the slowdown in global trade amid the pandemic.
Approval by the European country sets an important precedent for emerging regions, including Brazil.
Fiscal results better at the margin
Recovering employment.
Overall delinquency slid 0.1 p.p. to 2.2%.
Fears about virus mutation are offset by optimism with vaccines
IPCA-15 ends the year with a 4.23% increase, from 3.91% in 2019.
Smaller-than-expected current account surplus in November due to stronger profits and dividends outflows.
There is little room for negative inflationary surprises in 1Q21, while positive surprises may anticipate the end of forward guidance.
In the U.S., the first doses of the Pfizer-BioNTech vaccine started to be distributed this week.
Minutes clarify conditions to discard forward guidance. Given our inflation forecast, we expect this to happen only in the fall (S. Hem.)
Strong retail sales in October. We expect a deceleration in the coming months.
The committee kept the Selic rate at 2.0% p.a., as widely expected, at its last monetary policy meeting for 2020.
Europe and Brazil to start vaccinating in early 2021.
Food-at-home and housing prices came in above expectations.
We expect the Copom to keep the Selic rate at its all-time low (2.00% p.a.) at its meeting on December 8 and 9.
The breakdown among components shows a V-shaped recovery in the goods sector.
Worsening trend in the region has reversed in the past few days.
In October, industrial production climbed 1.1% mom/sa
Last month's figures begin to show some normalization in imports, but overall surplus remains high.
Fiscal challenges are high.
The seasonally-adjusted deliquency rate in the system remained broadly stable.
Employment improves at the margin
In Brazil, relative stability of cases and deaths at the margin, but hospitalizations on the rise.
IPCA-15 rose 0.81% in November, above expectations. Some services (food away from home and transportation) prices accelerated at the margin.
New cases show signs of improvement in Europe, but continue to rise in the US. In Brazil, cases also increased, but with some distortions.
Retail sales are well above their pre-crisis levels
Second wave remains in focus, particularly in Europe and in the U.S. In Brazil, official data remains unavailable due to system issues.
IPCA rises 0.86% in October. Core inflation continues to accelerate at the margin.
Industrial production increases 2.6% mom/sa in September
Second wave in the U.S. and in Europe remains in focus. In Brazil, the number of new cases resumed its downward trend.
Still weak imports keep trade surplus at historically-high levels
We see the minutes as consistent with our view that the committee will leave the base rate unchanged, at 2.0% pa, until late 2021.
Fiscal challenges remain high
Low participation rate prevents sharper increase in unemployment
.
The Copom left the base rate unchanged at 2.0% p.a., as had been expected by the market, and tweaked its communication in a hawkish direction.
Overall delinquency slid 0.2 p.p. to 2.4%.
September marks the sixth consecutive monthly current account surplus. Over 12 months, the CAD reached 1.4% of GDP.
IPCA-15 advances 0.94% in October, pressured by food and airfare prices. Core inflation also accelerated.
We expect the Copom to keep the Selic rate at its all-time low of 2.00% p.a. at its next meeting.
New deaths in Europe are now rising faster, but still at trend that is proportionally much smoother than in the first half of the year.
Economic activity continues to improve in Brazil
Furniture & appliances and construction material boost retail sales
Our daily indicator for Brazil continues to rise and has momentarily surpassed pre-crisis levels during the past week.
Imports were stronger than expected in September, but remain at low levels. Trade Surplus remains wide.
Case counting also shows a downward trend in India and some stabilization (but still quite preliminary) in some European countries.
Lower participation rate prevents sharper increase in unemployment
.Fiscal challenges are high
The average interest rate and spread decreased.
.
The report shows forecasts that are consistent, in our view, with the maintenance of the Selic rate at a low level for a long period.
News cases show some stabilization in India, but continue to accelerate in most of Europe
IPCA-15 rises 0.45% in September. Pressure on food prices is expected to continue for the next readings.
Slower economic activity, a weaker exchange rate and social isolation have been impacting the current account
The Copom minutes reinforce that their forward guidance (low rates for long) still applies
The 7-day moving averages jumped with the latest bulletin, because data for the Sep. 7 holiday dropped out, not because of a change of trend
The committee left the Selic rate at its all-time low of 2.0% p.a., in a unanimous decision.
We expect the Copom to keep the Selic rate at its all-time low of 2.00% p.a. at its next meeting
Core retail sales on the rise
After months hovering around 1000 per day, new deaths in Brazil seem to have entered a clear downward trend
IPCA rises 0.24% in August, with pressure on food prices and relief in the education group
Strong and widespread growth.
New deaths receded again in Brazil, reaching the same levels of the second half of May
Brazilian imports resume growth but remain at low levels
Result reflects the pandemic's impacts
The main challenge is to rebalance fiscal accounts
The average interest rate and spread also decreased.
After a long period of stability, our indicator for the U.S. now shows an upward trend, consistent with the retreating outbreak
July marks the fourth consecutive monthly current account surplus.
Deflation in education prices helped to decrease the monthly gain.
..
Breakdown shows widespread gains
Core retail sales return to pre-crisis level
In Brazil, the number of new cases has decreased slightly at the margin, while new deaths remain broadly stable
The Copom minutes reinforce the perception that the authorities will not move in the next policy meeting
July’s IPCA close to estimates. Underlying service inflation remains on a declining trend.
Falling participation rate prevents steeper increase in unemployment rate.
With improvement in the U.S. and some stability in Brazil, global new cases interrupted (maybe temporarily) their upward trend
The text does not formally close the door to additional easing, but indicates that, if any, it will be even more gradual than today’s move.
Widespread growth
the decline in economic activity continues to yield strong trade surpluses
Fiscal deterioration, amid a pandemic
Overall delinquency slid 0.1 p.p. to 3.0% in seasonally adjusted terms.
The state of São Paulo found problems that may also have distorted the data of other locations
Lower pressure on the service and income deficit yields fourth consecutive current account surplus
Despite the already low level, the additional Selic rate cut would be mainly driven by recent inflation data, which was lower than expected
Weaker-than-expected IPCA-15 in July. Inflation dynamics remain benign.
In Brazil, slower growth of cases in the smaller cities may mean that the peak is already behind.
Over the past days, the countries with most significant increases of new cases per capita were the U.S., South Africa, Colombia and India
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