Halister News

(Bloomberg) -- Brazilian assets such as BRL are likely to continue outperforming EM peers through the year while acting president Temer embraces efforts to approve reforms needed to fix the economy, according to investments firm Quantitas.

• Temer’s economic team is better than that of previous government; “its diagnosis on Brazil crisis is correct,” portfolio manager Eduardo Longo says in a phone interview
• Market optimism will depend on the approval of reforms; while passing measures in Congress is challenging, people seem more aware of the need for spending cuts
• Despite being supported by reforms, BRL may suffer should the Fed raise rates, which would impact EM markets
• BCB may start a rate-cut cycle of at least 200bps between its July 20 and Aug. 31 meetings, Longo says
• NOTE: BRL up 10% YTD, best performance after RUB among EM currencies as investors anticipate president Rousseff’s impeachment; process started after a Senate vote on May 12