BRAZIL: BRL Recovers, S&P Manufacturing PMI Data Due
Jan-02 12:02
- The final trading session of 2025 was a positive one for the Brazilian real, staging a solid 2% recovery to post 11.4% gains against the dollar on the year. From a short-term perspective, USDBRL held an important resistance point around 5.60 in late December and some late profit taking may have assisted the pair lower, as the pessimism surrounding Flavio Bolsonaro’s presidential candidacy bid also dissipates.
- On today’s calendar, December manufacturing PMI is scheduled, having printed at 48.8 in the prior month. Attention will quickly turn to next week’s Focus survey and December IPCA inflation data as markets try to gauge the most likely timeline for BCB monetary easing to commence.
- President Lula approved, with vetoes, the draft of the Budget Guidelines Law for 2026. The approval was published in an extra edition of the Official Gazette of the Union on Wednesday night. Lula vetoed a section included by parliamentarians that increased the budget for the Special Fund for Financial Assistance to Political Parties, the so-called Party Fund.
- In other political news, former President Jair Bolsonaro was returned to prison following his surgery. Lawyers for Bolsonaro had asked a court Wednesday to convert his prison sentence for plotting a coup to house arrest, however, the Supreme Court rejected this request.
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MNI: US MBA: MARKET COMPOSITE -1.4% SA THRU NOV 28 WK
Dec-03 12:00
- MNI: US MBA: MARKET COMPOSITE -1.4% SA THRU NOV 28 WK
OPTIONS: Expiries for Dec03 NY cut 1000ET (Source DTCC)
Dec-03 11:54
- EUR/USD: $1.1600(E611mln), $1.1625(E697mln)
- EUR/GBP: Gbp0.8885(E505mln)
- NZD/USD: $0.5730(N$622mln)
US TSYS: Modestly Bull Steeper Ahead Of A More Important Data Docket
Dec-03 11:51
Treasuries trade modestly bull steeper, partly better reflecting the latest increase in the likelihood that NEC’s Hassett is chosen as the next Fed Chair. Volumes are thin however ahead of the start of this week’s more notable labor releases plus ISM services for November before next week’s FOMC decision and new economic forecasts.
- Cash yields are 1-2bp lower on the day.
- 5s30s has extended yesterday’s steepening, currently at 109.7bp having earlier nudged 110bps to test steepest levels since the first half of September.
- TYH6 trades at 113-01 (+04+) on very thin cumulative volumes of 215k, steadily rising off yesterday’s latest low of 112-22 but still some way from reversing Monday’s losses attributed to rate locks and speculative selling.
- Support is seen at that 112-22 before 112-10+ (Nov 20 low), having already breached an important support at the 50-day EMA, whilst resistance is seen at 113-11 (Dec 1 high) before 113-22+ (Nov 25 high).
- Data: Weekly MBA mortgage data (0700ET), ADP employment Nov (0815ET), Import/export prices Sep (0830ET, shutdown catch-up), IP/Cap Util Sep (0915ET, shutdown catch-up), S&P Global US services PMI Nov final (0945ET), ISM Services Nov (1000ET)
- For more context here, see US OUTLOOK/OPINION: ISM Services Seen Dipping In Nov Despite More Optimistic PMI (Dec 2, 1600ET) and US OUTLOOK/OPINION: Weekly Tracking Suggests ADP Downside Surprise (Dec 3, 0608ET)
- Bill issuance: US Tsy $69B 17W bill auction (1130ET)
- Politics: Trump to make an announcement (1430ET)
