According to analysts at Rabobank, Brazilian assets have performed well in recent days (the week ends a bit sooner for the local markets, given this Friday’s municipal holiday in São Paulo), with the notable exception of BRL.
Key Quotes
“The markets are apparently taking the cue from signals of deep economic reforms to be proposed by the new economic team (led by Finance Minister Paulo Guedes), even though some key initiatives (e.g. the pension reform) still wait for the “green light” (expected for the coming days) by the new president, Jair Bolsonaro.”
“Hopes of further interest-rate cuts (which we at Rabo still do not see coming) and discussions of a new model of taxation for larger firms have also lent help for the local fixed income and equity markets. The Ibovespa stock index continues to outperform and test fresh new highs.”
“In an eventful week ahead, the macroeconomic highlight is December industrial production report (Fri.), expected to show lingering effects from global headwinds on Brazil’s manufacturing activity.”
“On the political front, the newly elected members of Congress will take office (Fri.) and the markets will closely watch the elections for the speakers of both houses.”
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