Week 25: the upcoming events that will influence Brazil’s financial markets this week

RIO DE JANEIRO, BRAZIL – After last week’s volatility stemming from monetary policy meetings and options (and also futures contracts) expiration, the Ibovespa stock index turns to five more days peppered with economic indicators.

The capital Brasilia will be in the spotlight again, while the international market is still concerned about inflation.

Eletrobras

The Chamber of Deputies is expected to address Provisional Measure 1031/21 today, which deals with the privatization of Eletrobras.

While the spotlight is on privatization and the progress of administrative and fiscal reforms, the government is preparing to launch the extension of emergency aid and the new Bolsa Família in coming days, with an eye on the 2022 electoral race.

An election with double-digit unemployment is always a bit more complicated. The country has broken the unemployment record held until now, with 50 million people between the ages of 15 and 29 neither studying nor working.

The week’s agenda is packed, starting with the Copom meeting minutes to be released on Tuesday, followed by the quarterly inflation report on Thursday and the IPCA-15, the official inflation forecast for June, on Friday.

Big Tech

Big tech companies will be in the spotlight this week when the U.S. House of Representatives Judiciary Committee votes on a package of antitrust legislation.

The new legislation is expected to apply to companies that have a market capitalization of more than US$600 billion and more than 50 million monthly active U.S. users or 100,000 monthly active U.S. business users.

Apple, Amazon, Facebook, Google and Microsoft are expected to be affected.

Even though this topic is of considerable importance, the market cannot forget last week and its main focus: the Fed’s footsteps.

This week, in particular, we will be influenced by a series of events and data, starting with a statement scheduled for tomorrow by Jerome Powell, Chairman of the US Federal Reserve.

Then, on Thursday, another reading of U.S. first-quarter GDP, in addition, of course, to Friday’s May PCE – recall that the personal consumption expenditures (PCE) price index is the Fed’s favorite indicator for measuring inflation.

Statements from the monetary authorities

European Central Bank President Christine Lagarde will speak twice today.

However, her statements are not expected to bring a change in the standard approach of the monetary authority. Most likely, the ECB will be the last major central bank to change its monetary policy stance, largely because of Lagarde’s expansionary leanings.

Indeed, the ECB’s chief economist, Philip Lane, has already signaled that the ECB is unlikely to consider the current data sufficient to change course at its next meeting in September.

In addition to the ECB, several Fed speakers, including the New York Fed President, are on the agenda to speak. Opinions are likely to be more diverse here, which could influence the market.

Economic agenda

The Brazilian economic agenda, although planned to be a busy week, starts less busy this Monday. The weekly trade balance is due at 3 pm and the Focus Report in the morning.

The highlights of the day are the vote on the Eletrobras privatization in Congress and the participation of Paulo Guedes in the extraordinary meeting of the National Monetary Council (CMN).

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