BRAZIL: Bolsonaro Trial Resumes, IPCA Inflation Tomorrow
- President Lula and other BRICS leaders spoke out against the use of tariffs at yesterday’s virtual BRICS summit and called on the bloc to defend multilateral approaches to trade and global affairs, and to play a critical role in strengthening the multilateral system. They also reiterated calls for developing countries to have a larger representation in global institutions such as the UN.
- USDBRL closed yesterday broadly unchanged around 5.42, having traded as high as 5.4479 earlier in the session. The bearish tone for the pair remains intact, with sights on key pivot support around 5.40, which was tested again last week. Resistance to watch is at the 50-day EMA, at 5.4847.
- Today, the Supreme Court will resume the trial of former President Jair Bolsonaro on charges of an attempted coup following his election defeat in 2022. The trial will resume at 1300BST(0800ET).
- Meanwhile, Finance Minister Haddad has a meeting with representatives of the Senate’s Independent Fiscal Institution at 1800BST(1300ET). Separately, Fitch Ratings is holding an event on “Brazil 2025”, which starts from 1315BST(0815ET).
- On the data front, Anfavea will release August vehicle production and sales data at 1400BST(0900ET). Focus this week however will be on tomorrow’s IPCA inflation figures, where the headline rate is seen moderating further to 5.09% y/y in August, still well above the BCB’s target, supporting the central bank’s hawkish stance. Yesterday's BCB Focus survey showed that analysts continue to expect the Selic rate to remain at 15.00% through year, before falling to 12.50% by end-2026.
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
AUSSIE 10-YEAR TECHS: (U5) Recovers With Treasuries
- RES 3: 96.501 - 76.4% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 2: 96.207 - 61.8% of the Mar 14 - Nov 1 ‘23 bear leg
- RES 1: 95.960 - High Apr 7
- PRICE: 95.710 @ 14:34 BST Aug 8
- SUP 1: 95.415/95.300 - Low May 15 / Low Jan 14
- SUP 2: 95.275 - Low Nov 14 (cont) and a key support
- SUP 3: 94.707 - 1.0% 10-dma envelope
Aussie 10-yr futures received a boost from the US Treasury rally that followed a poor NFP print. This keeps Aussie 10-year futures toward the top end of the recent range. To the upside, next resistance is at 96.207, a Fibonacci retracement point. Next support undercuts at 95.420 (pierced), the Feb 13 low, ahead of 95.275, the Nov 14 low and a key support. Clearance of this level would strengthen a bearish condition.
SECURITY: Trump To Sign Trilateral Peace Accord With Armenia/Azerbaijan Shortly
US President Donald Trump is shortly due to sign a trilateral peace agreement with Armenian Prime Minister Nikol Pashinyan and Azerbaijani President Ilham Aliyev at the White House. LIVESTREAM The event will provide another opportunity for Trump to style himself as peacemaker, after touting success in brokering peace deals between Rwanda/Congo, Cambodia/Thailand, and India/Pakistan.
- The accord aims to resolve a decade-long dispute over the sovereignty of Nagorno-Karabakh - a breakaway Azerbaijani province that was under de facto Armenian control from the dissolution of the Soviet Union until a 2020 war.
- Trump described the meeting on Truth Social as a “historic peace summit,” noting that the US will also sign “Bilateral Agreements [to] fully unlock the potential of the South Caucasus Region.”
- White House spokeswoman Anna Kelly told reporters that Trump would sign deals with both Armenia and Azerbaijan on energy, technology, economic cooperation, border security, infrastructure and trade.
- A White House official said: "It's about the entire region, and [the leaders] know that that region is known to be safer and more prosperous with President Trump."
- Reuters reports that the US will have development rights to build transportation links in the strategic Zangezur Corridor, a mountainous stretch of Armenian territory between Azerbaijan and its Nakhichevan exclave.
- Politico notes: “But whether this is just a photo opportunity or a lasting end to a conflict that has undermined stability in a region dominated by Russia and Iran will depend on whether the US can address several key challenges.”
FED: Balance Sheet Runoff Continues At Steady $20B/Month Pace (2/2)
Fed asset holdings were little changed in the past week. SOMA runoff totaled $2.8B (composed of $4.2B less nominal Tsy holdings and $1.4B more TIPS), with emergency lending/liquidity facilities $0.7B lower.
- Over the last 4 weeks, the $20B/monthly expected QT pace was roughly adhered to: MBS fell $18B, with Treasury net holdings down around $2B (a fall in TIPS holdings offsetting a slight rise in nominals).
- Discount window usage accounted for the fall in lending facility usage this week; takeup is now down to $4.9B, down $1.3B in the last month and down from the 1-year high of $6.4B set in July which looks to have been a temporary blip higher.
