RIO DE JANEIRO, BRAZIL – The Extended Consumer Price Index (IPCA) for 2021 will be released on Tuesday, January 11. Considered Brazil’s official inflation, the index should decelerate in December, but close the year in double digits and well above the target, which will lead the Central Bank to issue a statement to explain the divergence.
Inflation is also a highlight of the agenda in the United States and China. Statements by Fed Chairman Jerome Powell and also by the presidents of the European Central Bank (ECB) and the Bank of Japan (BoJ) will be monitored after the Fed’s hawkish minutes.
In Brazil, rising Covid numbers and news about elections and public servants are also being monitored. Financial reports in the United States may shake up stock markets this week.
IPCA AND RETAIL
The official inflation for 2021 will be released on Tuesday and should show an accumulated price increase of 10.02%, according to the median of economists surveyed by Bloomberg. The data will exceed the 5.25% target ceiling, which will lead Central Bank president Roberto Campos Neto to send the Minister of Economy a letter explaining the failure to meet the target.
On a monthly comparison, the IPCA should decelerate from 0.95% to 0.69%. The market will also assess inflation projections in the Focus survey, to be released this Monday. The week will also have activity data such as retail sales (Friday) and services (Thursday), after industrial production came in lower than expected in November.
CPI, POWELL AND BANKS
Inflation will also be highlighted in the U.S. with CPI (Consumer Price Index) on January 12 and PPI (Producer Price Index) on January 13, after the Fed minutes from last Wednesday caused market volatility by signaling faster interest rate hikes. CPI is expected to decelerate monthly, but at a higher year-on-year pace, and may reach its highest level in almost 40 years.
The week will also see statements by several leaders of the American Central Bank, including Jerome Powell, on January 11, at a hearing on his reappointment as chairman. ECB president Christine Lagarde will speak on January 14, and the BoJ’s Kuroda will speak on January 11.
China will also have a busy agenda, with inflation and financial account data. Balances of large American banks, including JPMorgan, Citigroup and Wells Fargo, could affect stock markets in New York.
ELECTIONS AND FISCAL
Movements towards the 2022 elections continue to be in the market’s focus, as well as potential threats to public accounts. Workers’ Party (PT) deputy Gleisi Hoffmann said that the labor reform will be reviewed in the party’s government plan.
Ex-president Lula and party members are also considering working to reverse other bills passed in recent years, during the governments of Michel Temer and Jair Bolsonaro, such as privatizations and the spending cap. A wing of the party also advocates revoking the Central Bank’s autonomy, but this discussion would still be at a less mature stage.
Pressure for salary hikes is also in the spotlight. The first public protest of civil servants is expected to take place on January 18 outside the Central Bank and later at the Ministry of Economy.
ADVANCE OF COVID
The market also continues to monitor the advance of Covid amid the spread of the Omicron variant in the country. Brazil registered 50,000 coronavirus infections on Saturday, with 103 deaths.
CAMIL AND BRASKEM
In addition to Camil’s (CAML3) financial report for the September-November period, to be released on January 13, the calendar for the subsequent offering of Braskem’s (BRKM5) shares promoted by its controlling shareholders Petrobras (PETR3/PETR4) and Novonor (former Odebrecht), should be released in the coming days. Petrobras expects the follow-on to occur by February.
BNDES (Brazilian Development Bank) is also planning to sell Ouro Fino shares and move forward with the capitalization process of Eletrobras (ELET3/ELET6). Ebanx, a fintech company with Advent as a shareholder, is among the companies that may go public in the U.S. at the start of this year.