EM LATAM CREDIT: Brazil Bi-monthly Report Preview: Fiscal Plans - Neutral take
Federative Republic of Brazil (Ba1 pos /BB /BB)
• This Thursday Brazil will issue the “bimonthly report”, according to media outlet Valor, officially known as the Primary Revenue and Expenditure Assessment Report (RARDP) which tracks government revenues and expenditures.
• We hope to get more details about proposed spending cuts, subsidies and revenue projections, keeping in mind the next presidential election October 2026 and a tendency for incumbents to increase spending ahead of elections to bolster popularity.
• The Brazil economic team will aim for a zero primary deficit; however, the Independent Fiscal Institution (IFI) says the federal government would need to utilize a BRL12.4bn credit and freeze an additional BRL22.4bn to meet this year’s fiscal target and that would result in a BRL64.2bn deficit, according to Valor.
• Some of the possible policy changes to look out for would include changes to the Bolsa Familia program, creation of a credit line for individuals living in substandard housing, gas vouchers, credit lines for motorcycle purchases by delivery workers and expanding the free electricity program for people with low income.
• A thorny issue that will likely not come up yet is the exclusion from the budget in the near term of BRL44bn in court ordered payment obligations (precatorios) which will be included starting in 2027.
• The IMF projects Brazil’s gross general government debt/GDP will rise to 92% in 2025, up from 87% last year. That relatively high debt level is offset by a large balance of reserves and external debt that is a low percentage of total debt.
• Brazil 2035 bonds issued February 2025 at T+220bps were last quoted T+222bps, 24bps tighter QTD.
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LOOK AHEAD: Eurozone Timeline of Key Events (Times BST)
| Date | Time | Country | Event |
| 25-Apr | 0745 | FR | Manufacturing Sentiment |
| 29-Apr | 0700 | DE | GFK Consumer Climate |
| 29-Apr | 0800 | ES | HICP (p) / GDP |
| 29-Apr | 0900 | EU | M3 / Consumer Expectations Survey |
| 29-Apr | 0900 | IT | ISTAT Confidence Indices |
| 29-Apr | 1000 | EU | Consumer Confidence, Industrial Sentiment |
| 30-Apr | 0630 | FR | GDP (p) / Consumer Spending |
| 30-Apr | 0700 | DE | Import/Export Prices / Retail Sales |
| 30-Apr | 0745 | FR | HICP (p) / PPI |
| 30-Apr | 0855 | DE | Unemployment |
| 30-Apr | 0900 | DE | GDP (p) / State level CPI |
| 30-Apr | 0900 | IT | GDP (p) |
| 30-Apr | 1000 | EU | GDP preliminary flash est. |
| 30-Apr | 1000 | IT | HICP (p) |
| 30-Apr | 1100 | IT | PPI |
| 30-Apr | 1300 | DE | HICP (p) |
JGBS: Twist-Steepener Holds Going Into W/E, BoJ Gov Ueda Reiterates Caution
JGB futures are stronger, +18 compared to settlement levels, sitting near the middle of the range after a choppy session.
- “Governor Kazuo Ueda reiterates his stance that the central bank will carefully monitor if its economic outlook will be realized, accounting for the effects of US tariff measures, without preconception. The BoJ will raise the benchmark rate if the outlook is realized, Ueda says in response to questions in parliament.” (per BBG)
- “Fukoku Mutual Life Insurance Co. plans to invest in Japan's super-long government bonds this fiscal year after their yields skyrocketed. The company aims to increase domestic government bond holdings by ¥30 billion, with gross purchases potentially reaching ¥300-400 billion.” (per BBG)
- Earlier today, Headline CPI for March showed +3.6% y/y versus +3.7% estimate. Core and Core-Core printed +3.2% y/y and +2.9% y/y, respectively, versus estimates of +3.2% and +2.9% and priors +3.0% and +2.6%.
- Cash US tsys are closed today for the Good Friday holiday.
- Cash JGBs have twist-steepened, pivoting at the 20-year, with yields 2bps lower to 5bps higher.
- Swap rates are 2bps lower to 2bps higher, with a steepening bias.
- On Monday, the local calendar will see Tokyo Condominiums for Sale data.
