HALISTER1: Brazil Market Anticipates Bill Approval; Tally Is Key: Analysts

Brazil Market Anticipates Bill Approval; Tally Is Key: Analysts

(Bloomberg) -- BRL and stocks gain as investors expect President Temer to win a vote later today on spending cap bill; the vote tally will be key as a sign of the govt’s ability to implement the broad reforms agenda, analysts say.
  • Government win has being priced in, Mauricio Oreng, senior strategist at Banco Rabobank, says in a phone interview
    • Expectation is reasonable that government will win with 350 votes vs a minimum of 308 needed for passage; if the bill passes with a very tight margin, it could bring uncertainty about Congress’s support for reforms
    • “The government is putting all its chips into the bill’s approval”
    • Along with slowing CPI, bill vote may help allow BCB to cut rates by 25bps in next week’s meeting
  • Government has worked hard to approve the measure as it may affect investors’ confidence, Ricardo Sennes, director at Prospectiva Consultoria, says
    • Temer government considers the vote as a “silver bullet” for its reforms agenda, Sennes says
  • Prosecutor-General Office’s challenge on spending cap may not be accepted by the Top Court, MCM Consultores says in a e-mailed note
    • In a recent similar decision, the Court assessed that decisions on budget are a Congressional role, not a Judiciary one
Alert: HALISTER1
Source: BFW (Bloomberg First Word)

People
Mauricio Oreng (Banco Rabobank International Brasil SA)
Michel Temer (Federative Republic of Brazil)
Ricardo Sennes (Prospectiva Consultoria)

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