Halister News

--LAUREN BERRY

(Bloomberg) -- Market is looking for BCB’s signals about when the easing cycle might end, while largely expecting a cut of 100bps in September meeting. 

• Bets on further reduction of the Selic rate in October were reinforced with the improvement of the inflationary expectations and after BCB’s Carlos Viana reportedly said that bank wouldn’t necessarily need to end current easing cycle gradually
  • NOTE: Viana’s comments were reported by Valor Economico newspaper based on a meeting with economists on Aug. 23
• Viana’s comments don’t necessarily mean that the 100bp cutting pace will be maintained after September meeting, but may signal that BCB doesn’t want to commit to a particular decision, Rabobank Strategist Mauricio Oreng says
  • BCB may slow pace of cuts to 75bps in October, not 50bps as forecast by Rabobank and as the market is pricing for now
  • Oreng sees Selic at 7.50% at year’s end, with downward bias
• BCB may end easing cycle without necessarily slowing the pace of cuts, Fibra Chief Economist Cristiano Oliveira says by telephone
  • BCB is laying the groundwork more than indicating that it will cut rates to less than 7%, as market is speculating
  • Selic at 7% would mean a real interest rate compatible with the inflation target for 2018 and 2019 and also compatible with the GDP of the next quarters
  • Fibra sees cuts of 100bps in Sept., 75bps in Oct. and 50bps in December, "a stepladder"
• Next Copom statement should signal future steps, but if not, tone should be perceived as hawkish by the market, BofA ML Chief Economist and Strategist for Brazil David Beker says
  • Beker sees a cut of 100bps in September and cuts of 50bps in the last two meetings of the year
• NOTE: Swap rates market is pricing 100bps cut in Selic rate in September and 57.13bps in October, according to CDIE; projections are larger than a week ago, when market forecast cuts of 94.09bps and 49.34bps, respectively

Original Story: Mercado discute ‘escadinha’ da Selic e reforça viés de baixa To contact the translator on this story: Giulia Camillo in Sao Paulo at gcamillo@bloomberg.net Reporters on the original story: Vinícius Andrade in São Paulo at vandrade3@bloomberg.net; Josue Leonel in Sao Paulo at jleonel@bloomberg.net; Ana Carolina Siedschlag in São Paulo at asiedschlag@bloomberg.net Editors responsible for the original story: Giulia Camillo at gcamillo@bloomberg.net Jose Orozco

--Washington Newsroom (202) 624-1820

--Washington Newsroom (202) 624-1820

(Bloomberg) -- Following are forecasts for today’s economic releases as compiled by Bloomberg News.

• Adv Goods Trade Balance $-64.5b; range $-67.3b to $-63b (31 estimates)
• Wholesale Inv. 0.3% m/m; range 0.2% to 0.5% (9 estimates)
  • In June, the merchandise trade deficit narrowed to $64 billion, the lowest since December, amid a recovery in exports
  • Data on the July trade deficit in both goods and services will be issued Sept. 6

To contact the reporters on this story: Alex Tanzi in Washington at atanzi@bloomberg.net; Vincent Del Giudice in Denver at vdelgiudice@bloomberg.net To contact the editors responsible for this story: Alex Tanzi at atanzi@bloomberg.net Kristy Scheuble