Halister News

(Bloomberg) -- Brazil’s President Michel Temer will most likely survive the corruption scandal challenging his administration, which will support the passage of watered-down reforms and a continuation of the country’s modest economic rebound, says BMI Research in report.

• Reforms will buoy investor sentiment and support a modest economic recovery in 2017, broadly in line with BMI forecast for real GDP growth of 0.5%
• Nonetheless, Temer’s presidency remains at significant risk due to the electoral court challenge
  • An unfavourable ruling would generate extended uncertainty and economic downside
• A split between PSDB party and the government seems unlikely to happen
  • Temer is likely to maintain the support of his coalition due to a lack of viable candidates to succeed him
• There’s scope for weakened reforms to move through Congress

To contact the reporter on this story: Ana Carolina Siedschlag in São Paulo at asiedschlag@bloomberg.net To contact the editors responsible for this story: Daniela Milanese at dmilanese@bloomberg.net Danielle Chaves

(Bloomberg) -- Peso denominated bonds continue to be seen as one of the most attractive deals on the street, which has failed to materialize into actual inflows.

• ARS remains confined within 16-16.18 range since May 19 despite reiterated views of its high yield sovereign bonds to be an invitation to an easy gain due to its reduced political risks
• Morgan Stanley also recommends jumping into Argentinian bonds as bank is bullish on emerging-market local rates, currencies and sovereign credit for 2H
• Uncertainty tied to Brazilian economy outlook hit by numerous political scandals and BCRA potential return to FX market as USD buyer continues to be main hurdles to keep investors to actually becoming long ARS
• NOTE: Davison Santana is an FX strategist who writes for Bloomberg. The observations he makes are his own and not intended as investment advice.
• Some information comes from FX traders familiar with the transactions who asked not to be identified because they are not authorized to speak publicly

To contact the reporter on this story: Davison Santana in Sao Paulo at dsantana6@bloomberg.net To contact the editors responsible for this story: Rita Nazareth at rnazareth@bloomberg.net Andres R. Martinez