CHILE: Fiscal Deficit Forecasts Raised Further, BCCh’s Soto Speaks Today
Oct-13 11:55
- The Chilean peso has opened on the front-foot on Monday, amid a rebound in copper prices, as the worst fears of a major escalation in US-China trade tensions have eased for now. USDCLP has edged down by 0.3% in early trade to 957, although the pair remains over 1% above last week’s lows following Friday’s rally. On the upside, key short-term resistance has been defined at 968.90, the Oct 6 high. Clearance of this hurdle is required to signal a reversal. On the downside, attention is on support at 946.87, the Sep 16 low.
- The budget office has raised its 2025 fiscal deficit forecast to 2% of GDP, according to its latest quarterly public finance report, from 1.5% previously. The 2026 deficit estimate was also increased by 20bp to 1.5% of GDP. Public debt is now expected to rise from 42.4% of GDP this year to 43.2% in 2026, before peaking at 43.7% in 2027.
- Today, BCCh Board member Claudio Soto is due to speak about the country's economic outlook at an HSBC event at 1400BST(0900ET).
- Separately, the advisors to the main presidential election candidates are scheduled to debate on the crime and security issues at 1500BST(1000ET). The latest poll from Cadem on Sunday shows that left-wing candidate Jeanette Jara continues to lead in first round voting intentions for the Nov 16 election, with 28% of the vote (+1pt on last week). Hard-right candidate Jose Antonio Kast is unchanged on 23%, while centre-right Evelyn Matthei is on 14% (-1pt). Kast is still expected to win in a second-round run-off in December.
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AUSSIE 3-YEAR TECHS: (U5) Bounces Further Off Support
Sep-12 21:45
- RES 3: 97.190 - High May 5 2023
- RES 2: 96.932 - 76.4% of Mar-Nov ‘23 bear leg
- RES 1: 96.860 - High Apr 07
- PRICE: 96.550 @ 15:36 BST Sep 12
- SUP 1: 96.430/95.900 - Low Sep 3 / Low Jan 14
- SUP 2: 95.760 - Low 14 Nov ‘24
- SUP 3: 95.480 - Low Jan 11 2023 and a major support
Aussie 3-yr futures are trading off recent lows. A resumption of gains from here would further narrow the gap with resistance at 96.730, the Sep 17 ‘24 high, leaving 96.860 as the next key level. Any continuation lower would instead strengthen a bearish threat. This would refocus attention on 95.760, the 14 Nov ‘24 low. Conversely, a reversal higher would open 96.860, the Apr 7 high.
FED: MNI Fed Preview-September 2025: A Reluctant Return To Easing
Sep-12 21:16
We've published our preview of the upcoming FOMC meeting - Download Full Report Here
- The Federal Reserve is set to resume its easing cycle at the September 16-17 meeting with a 25bp cut to the funds rate range to 4.00-4.25%.
- The decision to cut after a 5-meeting pause was well-telegraphed by Chair Powell, whose Jackson Hole speech described a “shifting balance of risks” toward a weaker labor market that “may warrant adjusting our policy stance”.
- The updated quarterly projections aren’t likely to bring many changes to the macroeconomic variables, but as usual the signal sent from the Fed rate “Dot Plot” will garner attention. A Committee split between expecting one or two further cuts this year is likely, keeping each of the remaining meetings of 2025 “live”.
- The Statement will downgrade the description of the labor market to reflect a rise in the unemployment rate and poor payrolls growth, and is likely to include at least one dissent to the rate decision.
- But with a Committee that is fairly divided on the way forward, Powell will be noncommittal on future action, reiterating that policy is not on a preset course, and upcoming decisions will be data-dependent.
- A key undercurrent is an increasingly activist approach to Fed personnel management from the White House, which leaves the composition of the FOMC uncertain not just over the medium-term but also at this meeting.
MNI’s separate preview of sell-side analyst summaries to follow on Monday Sep 15
RATINGS: Fitch: France Cut To A+ From AA, Portugal Up To A From A-
Sep-12 21:07
Fitch has downgraded France's sovereign rating to A+ (with stable outlook) from AA-. Release here.
- Among other factors in the decision, Fitch cites "High and Rising Debt Ratio", "Political Fragmentation Hinders Consolidation", "Weak Fiscal Record", "High 2025 Deficit", "Uncertain Fiscal Consolidation Path", and "Fiscal Rigidities".
- In "Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade", Fitch cites "Public Finances: A sustained increase in government debt/GDP over the medium term, due to failure to implement fiscal consolidation measures and/or a persistent increase in financing costs" and "Macro: Materially lower economic growth prospects and weakened competitiveness." Conversely, potentially leading to positive ratings action would be "Public Finances: Confidence that government debt/GDP will be put on a downward trajectory over the medium term, for example, due to fiscal consolidation and/or stronger economic growth".
- Fitch also raised Portugal to A (stable outlook) from A-, while elsewhere, S&P raised Spain to A+ (stable outlook) from A.
- As MNI wrote earlier, we expected France to be downgraded to A+ and Portugal to be upgraded to A.
