Rabobank analysts point out that in terms of macro events of last week, the Copom minutes and the 19Q3 inflation report added little news from a policy standpoint.
Key Quotes
“The message conveyed in the 18-Sep-2019 Copom statement remains pretty much valid, as the details provided by the BCB corroborate expectations of additional monetary easing ahead. We continue to look for two more cuts of 50bp, taking the Selic rate to a new historical low of 4.50% (and there staying until no earlier than 2021).”
“A couple of employment reports out for August (Caged job creation, PNAD household survey) pointed to a tepid and slackened job market, still highly supported by informal jobs – despite preliminary signs of firming in registered jobs.”
“A relatively thin calendar for the week ahead. The highlight is the August industrial production (Tue.), for which we estimate a gain of 0.6% m/m – ending negative sequence for the last three months. The weakening momentum in global manufacturing is expected to keep weighing in the Brazilian industry ahead, diminishing the potential thrust from a possibly better momentum in domestic demand.”
“Lastly, the voting of the pension reform bill on the Senate floor (first round) was postponed to 01-Oct-2019 (Tue.). We expect (or hope for) minor changes to the current text, keeping the total expected federal for the next ten years just above BRL 870 million. Needless to say, this piece of legislation is key for the outlook of public sector solvency.”
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