Five hot topics for Brazil this week

Future interest rates should react to the IPCA, which may show the second monthly deflation in a row next Friday, and to the 2023 projections in the Focus bulletin.

Electoral polls and acts of September 7 are political highlights. Abroad, speeches by Fed officials and the expected ECB rate hike affect the yield curves. Week starts with liquidity affected by the US holiday.

IPCA AND FOCUS

The median estimate of the economists for the August IPCA points to a drop of 0.39%, against -0.68% in July. In twelve months, the market projection is for the IPCA to show a sharp deceleration to 8.74%, against 10.07% in the previous month.

The exoneration of fuels and the price cuts made by Petrobras are bringing down the estimates for inflation this year. The week begins with the Focus survey, which reduced the projection for inflation for 2023 for the second time in a row.

SEPTEMBER 7 AND POLLS

Investors will monitor the demonstrations on September 7, when the market closes for the Independence Day holiday.

Jair Bolsonaro is expected to participate in events in Brasília and Rio. Last year, the president’s statements against the STF raised the political temperature, with a strong market reaction.

The next electoral polls on the radar are those by Ipec, BTG/FSB, Genial/Quaest, and PoderData.

According to Datafolha released on Thursday, Lula maintained his lead in the presidential race but saw his chance of victory in the first round diminish with the improvement of the third-way candidates after the beginning of the advertisements and also the debate on Sunday.

POWELL AND ISM SERVICES

After payrolls on Friday, the focus turns to possible signals from Fed leaders next week.

Fed Chairman Jerome Powell will speak at a monetary policy event next Thursday, and other members of the institution, such as Lael Brainard, are also expected to move markets amid bets on a more aggressive Fed policy.

The Beige Book and ISM services are other highlights on the reduced data agenda in the US, which will have a holiday on Monday.

ECB AND OPEC

The global monetary tightening against inflation will also have as protagonist the ECB, which meets next Thursday and is expected to raise its main interest rates by 0.75 percentage points according to the median of estimates.

The president of the European Central Bank, Christine Lagarde, speaks after the decision.

The week will also include GDP results from the eurozone and Japan and testimony by BOE President Andrew Bailey to the British parliament. A new UK premier will be announced on Monday.

OPEC+ meeting on the same day should move oil prices.

COMPANIES

Ibovespa’s new theoretical portfolio goes into effect for the September to December period on Monday.

Arezzo, Raízen, and São Martinho were included in the index, while JHSF was excluded.

The week still has the debut of the new shares of IRB Brazil, on the 5th, after the follow-on, and the meeting of CCR with investors and analysts, on the 9th.

With information from Bloomberg