Quarterly Inflation Report, Caged and Final US GDP Reading: What to Watch This Week

The last week of June will begin with investors’ attention focused on Brasília. The government’s maneuver to reduce the impact of high fuel prices on inflation, through an aid package via the Proposed Amendment to the Constitution (PEC), increased market fears about fiscal risks. The Ibovespa had its lowest score in almost two years and, until last Friday’s trading session (24), the main index of the Brazilian stock exchange accumulated a monthly drop of more than 11%.

According to Agência Senado, the rapporteur of PEC 16, senator Fernando Bezerra Coelho (MDB-PE), should deliver his report on Monday afternoon (27). According to him, the text should include, in the constitution, an increase of R$ 200 in the value of Auxílio Brasil, a readjustment of the gas allowance of around R$ 70.00 and the creation of the “truck voucher”, which will be R$ R$ 1,000, for R$ 680 thousand drivers. All initiatives will be valid until the end of 2022.

“Attention should be paid to attempts by lawmakers to broaden the scope of measures during the course of the proposal,” warn XP analysts.

Indicators in Brazil

In Brazil, the main indicators on the agenda are scheduled for Thursday (30), among them, labor market numbers. For the Caged for May, Itaú believes that the creation of formal jobs in the private sector should remain high. For Pnad, the bank expects the unemployment rate to reach 10.1%. “In addition to the unemployment rate, it will be important to see the evolution of wages, which have recently recovered, helping to increase disposable income for consumption in the first quarter of 2022,” wrote the Itaú analysis team.

That same day the central government’s fiscal accounts for May are released. Itaú analysts forecast a deficit of R$30 billion. “The consolidated public accounts, also referring to May, will be released the following day [sexta-feira, 1] and, in this case, we expect a deficit of R$ 25.2 billion”.

Also on Thursday, the Central Bank’s quarterly inflation report is expected. Initially, the presentation of scenarios for the consumer price index (IPCA) was scheduled for the 23rd, but was postponed due to the strike of BC servers.

“The report will present the committee’s view of the inflation scenario and economic prospects, in addition to the usual studies on specific topics. It is worth mentioning that, at the last monetary policy meeting, the Copom delivered the expectation of a 50 basis point increase, taking the Selic to 13.25% per year, and its statement indicated that the next policy move will be a similar or smaller increase. ” says an analysis by Itaú. The bank believes that the Copom will raise the Selic to 13.75% in August and end the monetary policy adjustment cycle.

The last week of June will begin with investors’ attention focused on Brasília. The government’s maneuver to reduce the impact of high fuel prices on inflation, through an aid package via the Proposed Amendment to the Constitution (PEC), increased market fears about fiscal risks. The Ibovespa had its lowest score in almost two years and, until last Friday’s trading session (24), the main index of the Brazilian stock exchange accumulated a monthly drop of more than 11%.

According to Agência Senado, the rapporteur of PEC 16, senator Fernando Bezerra Coelho (MDB-PE), should deliver his report on Monday afternoon (27). According to him, the text should include, in the constitution, an increase of R$ 200 in the value of Auxílio Brasil, a readjustment of the gas allowance of around R$ 70.00 and the creation of the “truck voucher”, which will be R$ R$ 1,000, for R$ 680 thousand drivers. All initiatives will be valid until the end of 2022.

“Attention should be paid to attempts by lawmakers to broaden the scope of measures during the course of the proposal,” warn XP analysts.

Indicators in Brazil

In Brazil, the main indicators on the agenda are scheduled for Thursday (30), among them, labor market numbers. For the Caged for May, Itaú believes that the creation of formal jobs in the private sector should remain high. For Pnad, the bank expects the unemployment rate to reach 10.1%. “In addition to the unemployment rate, it will be important to see the evolution of wages, which have recently recovered, helping to increase disposable income for consumption in the first quarter of 2022,” wrote the Itaú analysis team.

That same day the central government’s fiscal accounts for May are released. Itaú analysts forecast a deficit of R$30 billion. “The consolidated public accounts, also referring to May, will be released the following day [sexta-feira, 1] and, in this case, we expect a deficit of R$ 25.2 billion”.

Also on Thursday, the Central Bank’s quarterly inflation report is expected. Initially, the presentation of scenarios for the consumer price index (IPCA) was scheduled for the 23rd, but was postponed due to the strike of BC servers.

“The report will present the committee’s view of the inflation scenario and economic prospects, in addition to the usual studies on specific topics. It is worth mentioning that, at the last monetary policy meeting, the Copom delivered the expectation of a 50 basis point increase, taking the Selic to 13.25% per year, and its statement indicated that the next policy move will be a similar or smaller increase. ” says an analysis by Itaú. The bank believes that the Copom will raise the Selic to 13.75% in August and end the monetary policy adjustment cycle.

Itaú believes the rise in fuel prices by Petrobras should be reflected in the June IGP-M, an index that is usually used to adjust the value of rents, and will be published on Wednesday. The bank predicts a monthly increase of 0.5% in the indicator. “The reading will be pressured by diesel prices, reflecting the Petrobras adjustment announced in early May, while agricultural prices may show some deflation, especially beef, corn and soybeans”.

On Friday, the trade balance for the month of June comes out. Itaú forecasts a surplus of US$ 9.8 billion, down from US$ 10.3 billion in the same period last year. In the bank’s projections, exports should grow 2.3% compared to May, while imports should suffer a drop of 12%, with a reduction in purchases of fuels and fertilizers.

international agenda

In the United States, the agenda is relatively empty. The week begins with the numbers of durable goods orders, an indicator of the activity of manufacturing companies. That same day, the Dallas Fed’s industrial activity index comes out, with business conditions and activity in the Texas industrial sector.

The final reading of the first quarter GDP’s of the US and the UK, comes out, respectively, on Wednesday and Thursday. In Germany, retail sales and monthly employment rate (Thursday) will be released.

In Asia, we highlight the confidence indices in China, which are released on Wednesday and Thursday. In Japan, it has retail sales (on Tuesday), industrial production (on Wednesday) and labor market figures (on Thursday).

corporate news

On Tuesday, Oi (OIBR3) should disclose its results for the first quarter of 2022 (28), whose presentation had been postponed. O InfoMoney found that, now on Monday, the company’s judicial reorganization administrator will deliver to Justice the general list of creditors and the detailed report regarding the process. It is the missing documentation for the judge to give the conclusion sentence of the company’s RJ, which sold its mobile telephony assets to focus on the fiber optic business.

On Thursday, the National Electric Energy Agency (Aneel) auction will be held for the construction, operation and maintenance of 5,400 kilometers of transmission lines and 6,200 mega-volt-amps (MVA) in capacity to transform substations.

The forecast is for investments of around R$ 15.3 billion and the generation of more than 30 thousand direct jobs, according to the regulatory agency. The facilities should start operating within 42 to 60 months from the signing of the concession contracts, which are valid for 30 years.

Source: Infomoney