MNI China Daily Summary: Tuesday, March 18

MNI BRIEF: China Electricity Demand Up In February

MNI BRIEF: Beijing Industrial Value Added Up In Jan Feb

MNI BRIEF: China Crude Steel Output Down Over Jan Feb

MNI China Press Digest March 18:Inflows, Consumption, Industry

MNI: PBOC Net Injects CNY235.6 Bln via OMO Tuesday

EZ/UK Bond Supply Calendar: UK, Finland Due Tuesday

EZ/UK T-Bill Calendar: 6-Month ESM-Bill Auction on Tuesday

MNI: US JAN BUSINESS INVENTORIES +0.3%; SALES -0.8%

GERMANY: Handelsblatt Report on Lingering Uncertainties Ahead of Bundestag

GERMANY: Union/SPD Migration Alignment After Turmoil Threatened Debt Deal (BILD)

GERMANY: Official Interim Election Results Tilt Towards Missing BSW & FDP

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BRAZIL: Natixis Expects BCB To Signal Reduction In Hiking Pace

BRAZIL
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  • Natixis expects the BCB to increase its Selic rate by 100bp to 14.25% on Wednesday. However, the market will focus squarely on the forward guidance section of the communique, which Natixis believes will signal a reduction in the pace of hikes.
  • Inflation has been increasing but long-term inflation expectations have started to stabilise. For 2025, inflation expectations have risen to 5.66%, while expectations for 2026 and 2027 sit at 4.48% and 4.00%, respectively. Natixis continues to forecast IPCA at 5.00-5.50% by the end of the year and a moderation to around 4.0% in 2026.
  • However, the economy is slowing down. Most data indicators are coming in below expectations and in flat/negative territory. In short, the slowdown in domestic demand in Q4 continued into Q1 and may be worsening.
  • While inflation is likely to remain sticky in the short term, the economic slowdown and rally in BRL means that Natixis continues to believe the BCB will moderate the pace of rate hikes starting in May. Specifically, they forecast a 100bp increase in the Selic rate in March, +50bp in May and +25bp in June for a terminal rate of 15.00%.
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  • Natixis expects the BCB to increase its Selic rate by 100bp to 14.25% on Wednesday. However, the market will focus squarely on the forward guidance section of the communique, which Natixis believes will signal a reduction in the pace of hikes.
  • Inflation has been increasing but long-term inflation expectations have started to stabilise. For 2025, inflation expectations have risen to 5.66%, while expectations for 2026 and 2027 sit at 4.48% and 4.00%, respectively. Natixis continues to forecast IPCA at 5.00-5.50% by the end of the year and a moderation to around 4.0% in 2026.
  • However, the economy is slowing down. Most data indicators are coming in below expectations and in flat/negative territory. In short, the slowdown in domestic demand in Q4 continued into Q1 and may be worsening.
  • While inflation is likely to remain sticky in the short term, the economic slowdown and rally in BRL means that Natixis continues to believe the BCB will moderate the pace of rate hikes starting in May. Specifically, they forecast a 100bp increase in the Selic rate in March, +50bp in May and +25bp in June for a terminal rate of 15.00%.