HALISTER1: Temer Win in BZ Elections May Favor Reforms, Boost BRL: Analysts

Temer Win in BZ Elections May Favor Reforms, Boost BRL: Analysts

(Bloomberg) -- Allies of President Temer won elections in most cities this weekend, further improving prospects for reforms and boosting the chances for BRL gains and a BCB rate cut, analysts say.
  • Reforms approval may lead BRL to strengthen further to around 3.00/USD, Vladimir Caramaschi, chief-strategist at Credit Agricole Indosuez in Brazil, says in a phone interview
    • Market may bet on October rate cut of 50bps, from the 25bps currently seen as more likely, if reforms advance ahead of BCB meeting
    • Public spending cap bill vote next week is the main challenge for Temer in near term
      • This week, the measure may get a preliminary vote in commission; if Temer has a overwhelming win, it may be seen as a positive signal for markets, Caramaschi says
  • Brazil assets may continue gaining with progress on reforms, Jason Vieira, chief economist at Infinity Asset Management, says
  • “Should the cap bill pass, it will be the fiscal adjustment’s main concrete step, and then we could see a further drop in interest rates,” Bruno Marques, fund manager at XP Macro, says
  • “The election has generated a window of opportunity for Temer to pass the reforms as there is a sense of urgency both in PSDB and in PMDB for the approval of some measures,”
Rafael Cortez, analyst at Tendencias, says
  • NOTE: Temer’s PMDB and PSDB, both members of govt coalition, were the parties that won elections in most cities in last weekend elections
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Vladimir Caramaschi (Credit Agricole Brasil SA DTVM/Brazil)
Bruno Marques
Jason Vieira (Infinity Asset Management Administracao de Recursos)
Michel Temer (Federative Republic of Brazil)
Rafael Cortez (Tendencias Consultoria Integra)

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HALISTER1: U.S. ECO PREVIEW: ISM Manufacturing, Construction Due in 5 Mins.

U.S. ECO PREVIEW: ISM Manufacturing, Construction Due in 5 Mins.

(Bloomberg) -- ISM Manufacturing PMI seen at 50.3 in Sept. vs 49.4 in Aug. (forecast range 47.7 to 52); readings above 50 signal growth, below 50 contraction.
  • In July, the ISM index signaled contraction for first time in 6 months; orders and production weakened
  • Construction spending seen rising 0.3% in Aug. after showing no change in July (forecast range -1% to +0.5%); based on value of residential and non-residential projects
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

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