David Biller – Bloomberg, 05/06/2016
Brazil’s consumer inflation accelerated more than all analysts forecast in April, pushing the market to temper bets the central bank will lower interest rates.
The benchmark IPCA consumer price index climbed 0.61 percent after a 0.43 percent rise the previous month. That was more than the median forecast for a 0.54 percent increase from 44 economists surveyed by Bloomberg. Twelve-month inflation slowed to 9.28 percent.
Annual inflation at more than double the official target has hurt the confidence of Brazilians whose salaries don’t stretch as far as they once did. Making matters worse, the nation is confronting double-digit unemployment and the prospect of a second year of recession. Many believe the scope of the downturn will provide the central bank room to lower its benchmark interest rate from a near 10-year high.
Kenneth Rapoza – Forbes, 02/19/2016
Once China-like, Brazil’s labor market is starting to look old school Brazilian.
Maybe it was three years ago now when Latin America guru Tony Volpon of Nomura Securities in New York said over and over again in his Brazil reports that his country’s red hot labor market had no legs. China demand was slowing. Interest rates were rising. Investment was heading to the QE capitals of the world — U.S. and Europe. Volpon, now a technocrat at Brazil’s Central Bank, didn’t know how prescient he was at the time. Once the twin Petrobras bribery and money laundering scandals hit, all hell broke loose.
The big construction and engineering firms that tag-teamed with the oil giant and members of Congress to bilk billions from shareholders and public employees were rounded up like cattle. One by one, the captains of Brazilian industry were locked up. Their companies lost lucrative government contracts to build refineries and make marine vessels. Their employees lost their jobs.
Asher Levine and Bruno Federowsk – Reuters, 9/29/2015
Brazil’s real extended its decline into a third session on Tuesday as traders, concerned about the outlook for commodities prices and local growth, shrugged off the central bank’s efforts to boost the battered currency.
Other currencies in the region were little changed, while stocks moved slightly higher. The real strengthened at the open following the central bank’s announcement after Monday’s close that it would sell up to $2 billion in the spot market on Tuesday with repurchase agreements and hold an unscheduled currency swap auction. Still, the real remained near its weakest level on record,
hovering near 4.13 per dollar.
“It seems that the Brazilian currency market is nolonger accepting ‘more of the same’ when it comes to central bank auctions and is testing the bank for something stronger,” Jefferson Luiz Rugik, a trader with Brazilian brokerage Correparti, wrote in a client note.
Denyse Godoy, Paula Sambo, and Filipe Pacheco – Bloomberg Business, 7/21/2015
Brazilian shares dropped to an almost four-month low on speculation borrowing costs at Latin America’s largest economy will increase further, curbing prospects for equities. The real advanced for the first time in four days.
The Ibovespa extended this month’s slump after central bank director Tony Volpon said policy makers should keep raising interest rates until the outlook for inflation reaches the government’s target. The benchmark stock gauge has tumbled 11 percent from this year’s peak on concern the decision to boost the Selic to a six-year high to tame consumer prices will deepen an economic contraction.
“The central bank will probably increase rates again next week in a trend that’s damaging the economy and prospects for companies,” Pedro Paulo Silveira, the chief economist at brokerage TOV Corretora, said by phone from Sao Paulo.
Kenneth Rapoza – Forbes, 6/19/2015
Brazil’s economy is grinding to the bottom. But the bottom doesn’t appear to have been hit just yet.
The monthly GDP proxy at the Central Bank of Brazil, known as the IBC-Br index, surprised on the downside on Friday by falling 0.84% in April. That’s from a downwardly revised -1.51% decline in the previous month and is now compatible with a yearly drop of 3.13%.
Putting this into perspective, Brazil’s BRIC counterpart Russia is expected to contract 3.25% this year and its economy is facing weaker oil prices and sanctions against its oil and finance companies. Brazil is moving in line with a sanctioned economy that is over dependent on one commodity, while Brazil has good relations with the world and a much more diverse economy.
Financial Times, 6/19/2015
Brazil’s first quarter contraction was bad. But the second quarter is shaping up to be even worse.
The Brazilian central bank’s IBC-Br index, a preliminary indicator of GDP growth, showed that Latin America’s largest economy contracted for the sixth time in the past seven months.
Economic activity fell 0.8 per cent in April from March as successive interest rate hikes and the austerity measures implemented by Joaquim Levy, Brazil’s new market-friendly finance minister, take their toll on the economy.
Stephen Eisenhammer – Reuters, 6/17/2015
Brazil’s central bank decided on Wednesday to reduce again the rollover pace of currency swaps that mature early next month, a move that is likely to weigh on the Brazilian real.
The bank said in a statement that it would auction on Thursday as many as 5,200 currency swaps to roll over similar contracts that mature on July 1.
Last week, the bank cut its offering to 6,300 from 7,000 contracts per day.