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Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
BRAZIL
- Throughout August, Brazilian local swap rates have been under significant pressure. The 5-10 year segment of the curve has seen an increase of between 121-135 basis points.
- Political noise has been headlined by President Bolsonaro undermining the electoral system, delays to proposed tax reforms as well as fiscal burdens related to potential increases to Bolsa Familia payments in November.
- Additionally, inflationary pressures have further contaminated medium term expectations as seen by the latest focus survey where economists adjusted their forecast for 2022 inflation to 3.9% against a prior 3.84%.
- This has led to an increasingly more hawkish stance of the central bank, who now envision raising the key Selic rate above the neutral level.
- Analysts have noted that the currency may come into focus for the central bank who have previously intervened to stem BRL depreciation. The last time this occurred was in early July with spot around 5.30. The recent breakout to fresh highs around BRL5.45 may leave markets in intervention anticipation mode which could see DI swap rates susceptible to a further shift higher if considered the cleaner trade.
MNI/Bloomberg
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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