BRAZIL: Inflation Inside Target Range Gives Copom Room to Drop Hiking Reference
Dec-10 13:54
- The further moderation of IPCA inflation to a 14-month low in November should give the Copom more confidence that the very restrictive stance is having the desired effect ahead of this evening’s monetary policy meeting. The decline brought the headline rate back below the 4.5% target range ceiling for the first time since September 2024 and on course to end the year below the BCB's forecasts from its latest monetary policy report. (See Charts below.)
- For now, BCB officials maintain a cautious tone, with Governor Galipolo still emphasising that inflation is falling more slowly than the BCB would like. However, with inflation and inflation expectations declining and economic activity softening, there is scope for the Copom to soften its language later today, perhaps by removing the tightening reference, which could provide immediate optionality to the committee.
- In November, upside pressure came from the housing component (+0.52% m/m) on the back of higher electricity costs, while personal expenses (+0.77% m/m) also made another large contribution. On the other hand, food prices were flat once again, while household goods declined notably (-1.0% m/m) amid seasonal sales events. Core inflation pressures remained stable, and consistent with inflation within the target range.
Despite the softer data, local assets remain under pressure today amid concerns about Flavio’s Bolsonaro’s election bid. DI Swap rate are up as much as 15bp (+65bp over the last week), which leaves the market pricing ~250bp of rate cuts next year. As a comparison, economists see the Selic rate falling 275bp to 12.25% by end-26, according to this week’s BCB Focus survey (+25bp on the previous survey).
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US TSYS: Paring Losses
Nov-10 13:51
- Treasuries following Bund rebound off lows at the moment, Dec'25 10Y trades 112-21.5 (-6) still off early overnight "high" of 112-23. Decent volumes with TYZ5 >480k.
- Curves mildly flatter: 2s10s -.159 at 53.133, 5s30s -.659 at 100.651.
- TYZ5 resistance to watch is 113-02, the Nov 5 and 7 high. Clearance of this level would highlight a potential bullish reversal.
- While ending US Gov shutdown hopes have risen, decent rate lock sales added to overnight sale with Verizon 5Pt expected today.
MNI EXCLUSIVE: Ex-Head of Cleveland Fed's Center for Infl Research - Interview
Nov-10 13:49
- MNI interviews the former head of the Cleveland Fed's Center for Inflation Research -- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
GLOBAL POLITICAL RISK: Week Ahead 10-16 November
Nov-10 13:28
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(MNI) London – All timings are subject to change.
Monday 10 November:
- Global: The 30th session of the Conference of the Parties (COP30) to the United Nations Framework Convention on Climate Change gets underway in the city of Belém, Brazil, on the edge of the Amazon rainforest. The meeting will continue for another two weeks, with the Brazilian leadership attempting to reach a significant deal on combating climate change. Notably, the US is not participating, having already missed last week’s leaders’ summit.
