Business Cycles
In this report, we explore Brazil’s inflation and monetary policy outlook, the Lula administration’s back-and-forth between pragmatism and populism, and how these factors will affect Brazilian financial markets going forward. All in all, we believe Brazilian risk assets will be in a trading range relative to their EM peers in the next 12 months.
Falling inflation enables central banks to pause rate hikes, which is good news. But time goes on. Restrictive monetary policy, Chinese debt-deflation, energy supply shocks, US and global policy uncertainty, and extreme geopolitical risks will undermine hopes of a soft landing and beautiful disinflation.
The June US CPI release showed inflationary pressures cooled last month. The headline index moderated from 4.0% y/y to 3.0% y/y – slightly below expectations of 3.1% y/y. Similarly, core CPI growth eased from 5.3% y/y to 4.8% y/y – a sharper slowdown than the…
As expected, the Bank of Canada raised interest rates for the second consecutive month after restarting its tightening campaign last month. At 5.0%, the policy rate now stands 4.75 percentage points above where it was at the start of the tightening cycle last…
Wheat, corn, and soybean all traded lower at the Chicago Board of Trade on Wednesday following the US Department of Agriculture’s latest release of its monthly World Agricultural Supply and Demand Estimates (WASDE) – down 4.2%, 3.5%, and 2.4%, respectively. …
The Q2-2023 earnings season will kick off this Friday. The following are the investors’ “Cliff notes” to this earnings season. Market Expectations Earnings growth: According to Refinitiv IBES, earnings will contract by 6.4% y/y. If that is an actual…
According to BCA Research’s China Investment Strategy team, China’s fiscal support will be limited due to political and economic factors. China has heavily relied on government expenditure support to sustain its economic growth in recent years. However,…
BCA Research’s US Bond Strategy service’s base case outlook is that inflation will be sufficiently weak for the Fed to go on an extended pause after one more 25 basis point rate hike this month. This will cause both Treasury yields and slopes to trend…
China’s credit expansion surprised to the upside in June. Aggregate social financing totaled CNY 4.22 trillion – above expectations of CNY 3.10 trillion and exceeding CNY 1.56 trillion in the prior month. Similarly, the CNY 3.05 trillion worth of new…
Hot UK wage data focused investors’ attention on the Bank of England’s battle against sticky inflationary pressures on Tuesday. The 7.3% y/y increase in weekly earnings (excluding bonuses) in the three months to May surpassed expectations of a 7.1% y/y rise…