Latin America
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May 16, 2024 1:07 PM UTC
Unprecedented floods in Rio Grande do Sul, a state that contributes 6.4% to Brazil's GDP and 13.3% to its agricultural production, have submerged several cities. The immediate halt in economic activity may reduce Brazil's Q2 GDP by up to 0.4%. The federal government is increasing aid, potentially ra
May 15, 2024 12:18 PM UTC
Argentina's April CPI dropped to 8.8% after six months above 10%, with Y/Y CPI at 289%. Key rises included housing (+36%) and communication (+14.2%). Javier Milei's program and fiscal adjustments have reduced monetary emissions to zero, easing inflation. The Central Bank cut the policy rate to 40%.
May 14, 2024 2:35 PM UTC
The Brazilian Central Bank's latest meeting revealed a shift in forward-guidance, reducing the cut from 50bps to 25bps. While no immediate actions were taken, the minutes highlighted worsening conditions in three key areas: External Environment, Fiscal, and Economic Activity. Despite split votes on
May 10, 2024 1:06 PM UTC
Fed easing expectations for 2025 and 2026 can shift from a terminal 4% Fed Funds rate towards 3%, as the U.S. economy slows due to lagged tightening effects. Combined with Fed easing starting in September this should mean a consistent decline in 2yr yields. However, 10yr U.S. Treasury yields wil
May 9, 2024 6:11 PM UTC
April's CPI data, despite a 0.2% m/m growth, reveals a significant y/y uptick to 4.6% from March's 4.4%, challenging norms due to electricity tariff adjustments. Core CPI maintained stability with a 0.2% increase, while Core Goods CPI rose by 0.3% and Services CPI by 0.1%, accumulating a 5.2% y/y gr
May 7, 2024 12:43 PM UTC
Banxico will convene on May 9 to decide on the policy rate, having initiated a possible cutting cycle. Despite concerns, the MXN remains stable. The 25bps adjustment aims to maintain tight monetary policy while mitigating inflation. The board may split over this decision, but Banxico is likely to co
May 6, 2024 1:02 PM UTC
The Brazilian Central Bank (BCB) convenes on May 8 to set the policy rate. Previous forward guidance hinted at a 50bps cut in May, but recent statements from BCB President Roberto and some weakness in the BRL have shifted expectations to a 25bps cut. However, we anticipate the BCB maintaining a 50bp
May 2, 2024 2:27 PM UTC
Moody’s upgraded Brazil's outlook to positive from stable, maintaining its Ba2 rating, signaling a potential move to Ba1 soon. Strong growth prospects, attributed to institutional reforms, drove this shift. Despite lingering doubts, improved fiscal conditions and anticipated tax reform are bolster
April 30, 2024 5:54 PM UTC
INEGI released Mexico's Preliminary GDP for Q1 2024, showing 0.2% growth, slightly above expectations. Annual GDP slowed to 2.0% from 2.8% in Q4 2023. The economy is losing momentum due to tight monetary policy and weakened U.S. demand. Agriculture contracted by 1.1%, Industry by 0.4%, while Service
April 29, 2024 5:22 PM UTC
INEGI will release Mexico's Preliminary GDP data, indicating 0% growth in Q1, likely due to stagnation in key sectors like manufacturing and construction. The service sector, hit hard by the pandemic, also shows signs of sluggishness. While recovery is expected, sustained poor growth raises concerns
April 26, 2024 5:52 PM UTC
The INDEC data for February reveals a 0.2% economic shrinkage, signalling a 5.1% drop since August 2023, potentially leading to a Q1 2024 recession. High inflation and fiscal adjustments are primary causes. Some foresee 0% April inflation due to price realignment and stable ARS. Despite low reserves
April 26, 2024 9:30 AM UTC
Bottom line: While much focus is on the cyclical economic position to determine 2024 monetary policy prospects, the 2025-28 structural growth trajectory differs to the pre 2020 GDP trajectory for major economies. While global fragmentation has a role to play, aging populations are already having a
April 24, 2024 3:19 PM UTC
Our analysis delves into recent trends in the Brazilian labor market, focusing on CPI and wage inflation. Utilizing a model akin to Ghomi et al. (2024) and Blanchard and Bernanke (2023), we dissect recent spikes in wage inflation and CPI growth. Notably, our findings suggest that recent wage spikes
April 19, 2024 9:23 PM UTC
On June 2, Mexico will see historic general elections, marking the potential for its first female President. Claudia Sheinbaum of Morena and Xóchitl Galvés of PAN-PRI lead the race. Sheinbaum aims to continue Lopez-Obrador's legacy, while Galvés emphasizes social mobility. The polls show Sheimbau
April 18, 2024 1:39 PM UTC
The Brazilian government has revised its budget targets for 2025 and 2026, lowering the deficit to 0% and a 0.25% surplus in 2025 and 2026 respectively, from 0.5% surplus in 2025 and 1% in 2026. However, reliance on revenue increases poses challenges amid resistance from Congress. Despite reduced ta
April 17, 2024 12:34 PM UTC
Global markets are being driven by a scale back in Fed easing expectations and we see a 5-10% U.S. equity market correction being underway. However, with the market now only discounting one 25bps Fed cut in 2024, any downside surprises on U.S. growth or better controlled monthly inflation numbers
April 14, 2024 1:26 PM UTC
The INDEC's March CPI data reveals an 11.0% increase, down from February's 13.2%. Annually, Argentine CPI rose by 287% (Y/Y), with core CPI below 10%. Despite past shocks, we foresee continued monthly CPI slowdown. Argentina focuses on fiscal measures and on stabilize the exchange rate to accumulate
April 10, 2024 2:57 PM UTC
The latest CPI data from Brazil reveals a modest increase of 0.16% (m/m) in March, slightly below market forecasts. Despite this, the year-on-year CPI has dropped to 3.9%, remaining within the BCB bands but above the central target. Notably, the Food and Beverages group saw the most significant rise
April 9, 2024 6:43 PM UTC
Mexico's March CPI data, released by the National Statistics Institute, shows a slight increase of 0.29%, below the 0.36% expectation. Year-on-year CPI remains stable at 4.4%, above Banxico's 3.0% target. While fruit and vegetable prices dropped, transport costs rose. Concerns arise with Services CP
April 8, 2024 1:10 PM UTC
On April 9th, Mexico's National Institute for Statistics will release March's CPI data. Forecast suggests a 0.4% rise, keeping YoY CPI stable at 4.5%, mainly due to base effects. Core CPI likely to remain steady at 4.5%, showing progress in disinflation despite non-alignment with Banxico's 3.0% targ
April 5, 2024 2:18 PM UTC
Banxico's recent meeting minutes reveal a split among board members regarding monetary policy, with a 25bps rate cut to 11.0%. Despite progress in curbing inflation, differing views on policy direction persist. Inflation expectations deviate from targets, with potential risks in fiscal policy and wa
April 3, 2024 2:31 PM UTC
In 2023, Brazil witnessed a significant fiscal decline, with the GDP surplus of 0.5% in 2022 turning into a 2.1% deficit, surpassing the targeted 0.5% deficit set by the new fiscal rule. Despite measures aimed at reinstating fiscal sustainability, immediate adjustments are unlikely. The deterioratio
April 2, 2024 9:00 AM UTC
Into Q2, data and policy (actual and perceived) will dominate DM markets. The ECB will likely take the spotlight with a 25bps cut on June 7, as the Fed face a better growth/more fiscal policy expansion and a tighter labor market than the EZ but also with a better productivity backdrop and outlook to
March 28, 2024 2:20 PM UTC
The Brazilian Central Bank's Quarterly Inflation Report reflects uncertainty over disinflation and emphasizes caution in monetary policy. Despite slower expected disinflation and inflationary surprises in certain sectors, the BCB projects optimism with inflation nearing target. Labor market data sho
March 26, 2024 1:11 PM UTC
The Brazilian Central Bank has released the minutes of their last minutes. The minutes highlighted the uncertainty, labour market pressures and unanchored expectations. They decided to reduce the horizon of the 50bps ace to the May meeting which indicates a prospective reduction to diminish the pace
March 22, 2024 7:04 PM UTC
· Brazil and Mexico growth will decelerate from the growth rates seen in 2023. The stronger basis of comparisons in 2023 and the tight monetary policy will diminish growth during 2024. Brazil robust agricultural growth will not repeat in 2024, while Mexico growth is restrained by a tigh
March 21, 2024 9:09 PM UTC
Banxico has cut the policy rate by 25bps to 11% from 11.25%. The board stressed the drop on core inflation although their balance of risks is biased to upside. Banxico has not given any forward-guidance stating the next decision will be data-dependent. We believe Banxico will continue to cut the pol
March 19, 2024 2:40 PM UTC
The Banxico board will meet on Mar. 21 to decide the policy rate after 12 months of unchanged rates at 11.25%. With inflation now at 4.4% and signs of economic deceleration, a cutting cycle is anticipated. Banxico's exclusion of forward guidance hints at potential cuts, despite possible dissent amon
March 18, 2024 4:48 PM UTC
The Brazilian Central Bank is anticipated to cut the policy rate by 50bps, reaching 10.75%, amidst easing inflation and cautious market sentiment. The recent surge in food prices raises concerns, while the BCB is expected to abandon its usual forward guidance in favor of more data-driven decisions.
March 13, 2024 8:09 PM UTC
The February CPI release by Argentina's INDEC shows a slight ease in inflation to 13.8% (m/m), yet on an annual basis, it has soared to 276%, hitting a record high since the 1980s. Major increases were noted in Transport (21%), Food and Beverages (11%), and Housing (20%). While indicating initial im
March 12, 2024 6:55 PM UTC
The Brazilian National Statistics Institute (IBGE) released February's CPI figures, slightly exceeding market expectations at 0.82% (m/m), maintaining the Y/Y index at 4.5%. Notably, the rise was seen in the Educational group, alongside gasoline prices (+2.48%) and a drop in airfare tickets (-10.4%)
March 8, 2024 8:56 PM UTC
IBGE will release February's CPI data on Mar. 12, forecasting a 0.7% increase, driven mainly by education and food sectors. While some rises may persist, they're not indicative of a general price surge. Despite a 0.7% rise, Y/Y CPI is expected to drop to 4.4%, aligning with BCB targets. Forecasts su
March 7, 2024 10:16 PM UTC
The February CPI figures released by Mexico's National Institute of Statistics and Geography show a slight 0.1% increase, aligning with expectations. Year-on-year CPI dropped to 4.4%, ending a three-month rise. Food and Beverages notably fell by 1.3%, while Housing and Transports saw positive growth
March 4, 2024 1:21 PM UTC
INEGI will release February's CPI data, with an expected growth of only 0.1%. Despite this, the Y/Y index is forecasted to fall to 4.4% from January's 4.8%. Notably, Non-Core food CPI contracted by 3.9% in February, showing a reversal from January's rise. We anticipate a 0.3% increase in Core CPI, a
March 1, 2024 1:37 PM UTC
Brazil's GDP remained stable in Q4 2023, growing marginally lower than expected. Agriculture saw a significant contraction, while Industry and Services showed modest growth. Government consumption offset household contraction, and investment reversed a five-quarter decline. Despite annual growth, de
February 28, 2024 2:51 PM UTC
The Brazilian GDP is anticipated to have contracted by 0.1% in Q4 2023, yet the annual growth for 2023 is expected at 3.1%, marking the third consecutive year above the 3.0% threshold. Agricultural sector's significant 15% growth, primarily driven by soybean harvest, offsets the deceleration. Tight
February 21, 2024 7:32 PM UTC
The Brazilian economy experienced marginal growth of 0.2% in 2023, signaling a return to pre-pandemic low-growth trends. Despite a promising agricultural sector, projections show a contraction in 2024. Factors such as consumption push and cautious monetary policy influence future growth prospects. H
February 15, 2024 1:26 PM UTC
Argentina's CPI surged in January, marking a 20.6% increase (m/m), the highest globally. Annual figures show a staggering 254% rise. The rise was influenced by the exchange rate devaluation and the release of controlled prices. Only in April we will probably see a CPI cleaned from this noises. The g
February 14, 2024 10:20 PM UTC
Brazil's labor market showed remarkable resilience in 2023, with a notable decrease in unemployment to 7.4% from 8.6%. Increased occupation drove consumption and growth, though real wage growth outpaced job creation. Despite challenges, strong syndicates and minimum wage policies will sustain upward
February 13, 2024 1:02 PM UTC
The Brazilian Supreme Court's action against Bolsonaro's inner circle, accusing them of undermining the rule of law and plotting against electronic voting, signals a potential turning point. Bolsonaro's popularity, despite legal challenges, underscores Brazil's divided political landscape. The upcom