Halister News

(Bloomberg) -- Brazil central bank is expected to cut Selic rate by 100bps on July 26, taking key rate to the single-digits for the first time since October 2013 and at the lowest level since August of that year. 

• Analysts expect BCB to drop idea of change in easing pace in July meeting amid increasingly benign inflation conditions and FX resilience to the political crisis
• At the same time, analysts see BCB slowing down the easing pace at subsequent meetings
  • Even at a slower pace, there’s an increasing number of institutions cutting estimate for end-of-cycle Selic rate, with chances of it reaching 7%
• Inflation scenario, latest data "strongly indicate" 100bps cut in Selic rate, UBS Chief Economist for Brazil Tony Volpon says
• BCB changed the tone after its May statement and reduced the commitment to slower easing pace, while June scenario reinforce bets on 100bps cut, Nomura Strategist Joao Pedro Ribeiro says
• Trends that were occurring before the crisis continued, with low inflation, activity stabilizing at the margin, not indicating very rapid recovery, benign international scenario and inflation surprises to the downside, Banco Safra Chief Economist Carlos Kawall says
• It is prudent to continue to signal a step reduction; if there is room at next meeting, BCB can cut yet another 100bps, BofAML Chief Economist and Strategist for Brazil David Beker says
• Mauricio Oreng, Rabobank Brazil strategist, still expects a 75bps cut in July, amid uncertainty about pension reform, "which may affect how much neutral interest will fall and how sustainable the drop in interest and inflation will be"
• NOTE: Access TOPLive to follow coverage of Brazil rate decision and analysts comments on July 26 (in Portuguese). To create an alert, click here.

Original Story: Prévia: Aposta converge p/-1pp e sinal de redução ritmo no Copom 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; Marisa Castellani in Sao Paulo at mcastellani7@bloomberg.net Editor responsible for the original story: Daniela Milanese at dmilanese@bloomberg.net

(Bloomberg) -- Cash-flow environment remains supportive for govt bonds, with large redemptions totaling almost EU80b coming due over the next 10 days. Month-end index extension estimates are above average in Europe and very large for gilts.

• Eurozone flash PMI releases on July 24 may provide markets with a first look at 3Q data
• In the U.K., the large month-end extension and upcoming coupon payments have been widely highlighted. On the data front, 2Q GDP advance release is due on July 26
• Bloomberg Barclays index extension estimates show Treasury 0.07y, Eur Agg at 0.10y, and Sterling at 0.21y; breakdown here
• Citigroup sees extension of 0.09y for Europe, third-largest this year, with most support given to France, Spain and Italy; country breakdown here
  • Gilts are 0.41y, the largest in five years, primarily driven by 07/2018 UKT dropping out of the index
• SUPPLY/REDEMPTIONS: Auction supply may total around EU12b, equivalent to over EU9m/bp or 65k bund futures in risk terms
• July 24: Belgium to sell 0.2% 10/2023, 0.8% 06/2027, 1.60% 06/2047 for total EU2.2b-2.8b
• July 26: Italy I/L and CTZ sale
• July 28: Italy to sell bonds; expect new 5y, and 7y tap, alongside a CCT for up to EU8.5b, write Barclays in a note
• France to repay around EU36b in redemptions on July 26, though this may have already been invested due to T+2 settlement; Redemptions from Italy (EU22b) and Spain (EU20b) due in early August will be available for reinvestment late next week
• U.K. to sell GBP2.5b 1.5% 07/2027 UKT on July 25; equivalent to around 50k gilt futures; GBP3.17b in coupon payments are being returned to investors on July 24
• NOTE: Auction calendar is ECO20 WE

To contact the reporter on this story: Stephen Spratt in London at sspratt3@bloomberg.net To contact the editors responsible for this story: Ven Ram at vram1@bloomberg.net Keith Jenkins

(Bloomberg) -- Canada’s consumer price index seen rising 1.1% y/y in June after increasing 1.3% in May (forecast range 0.8% to 1.3%).

• Retail sales seen rising 0.3% m/m in May after increasing 0.8% in April (forecast range -0.1% to 0.6%); based on the value of goods sold