According to Rabobank analysts, Brazil’s latest batch of activity-related data suggests that 2020 is going to be a better year in terms of economic growth.
Key Quotes
“Highly correlated with growth, the local equity benchmark index had another positive week (2.1%), the third in a row. Ibovespa has already accumulated a gain of 6.2% in the month.The BRL also extended the gains and appreciated c. 0.5% vs the USD.”
“Possibly reacting to the positive surprises in the activity realm as well, fixed income assets are pricing in an anticipation of the end of the easing (or an earlier start of the tightening) cycle. We saw the nominal yield curve steepening, with the long end shifting up c. 30bp.”
“The IPCA-15 – preview for Brazil’s official inflation index – posted a gain of 1.05% m/m in December. The gap from our estimate stems mostly from higher than expected food and beverage prices (contribution of 0.11 p.p.).”
“The average of all main core inflation gauges is at 3.2% y/y (November: 2.9%) and 3.4% q/q-saar (up from 2.9%).”
“In a week shortened by the Christmas holiday, the few macro releases slated ahead will probably have limited capacity to rock the boat for Brazilian assets.”
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