BRAZIL: Itaú Macro Scenario: Between Optimism And Old Challenges in 2024
Dec-21 18:07
- Itaú have revised their USDBRL forecast for 2024 to 4.90 (from 5.25), based on a perceived improvement in the international environment, with the U.S. Federal Reserve expected to start cutting interest rates earlier next year. Low domestic risk premium and a good trade balance performance also support the currency. Regarding monetary policy, Itaú now expect a terminal rate of 9.00% at the end of the cycle (vs. 9.50% previously), based on the outlook for lower-than-anticipated inflation in 2024 and relief in the external scenario.
- On inflation, Itaú lowered their IPCA forecast in 2024 to 3.6% (from 4.0%), incorporating the impact of a stronger exchange rate on tradeable prices. Furthermore, still-high inventory levels suggest more benign dynamics in the core measure for underlying industrial products. The balance of risks for 2024 is symmetric. For 2025, given the de-anchored long-term inflation expectations and a still-tight labour market, Itaú see inflation at 3.5%.
- On the fiscal side, the target for the primary budget in 2024 will remain at zero, at least in the short term. That said, fiscal risks remain high considering the uncertainty surrounding the government's willingness to curb expenses and the effective impact on government revenues from the measures approved this year. Itaú revised their estimates for the primary budget deficit to 2.3% from 1.0% of GDP in 2023 and to 0.8% from 1.2% of GDP in 2024, reflecting the new timing and full classification of court-ordered payments as primary expenditures, as well as the extraordinary revenues expected for these years.
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US TSYS: US TSY 9Y-8M TIPS AUCTION: HIGH YLD 2.180%; ALLOTMENT 39.79%
Nov-21 18:02
- US TSY 9Y-8M TIPS AUCTION: HIGH YLD 2.180%; ALLOTMENT 39.79%
- US TSY 9Y-8M TIPS AUCTION: DEALERS TAKE 13.60% OF COMPETITIVES
- US TSY 9Y-8M TIPS AUCTION: DIRECTS TAKE 16.25% OF COMPETITIVES
- US TSY 9Y-8M TIPS AUCTION: INDIRECTS TAKE 70.15% OF COMPETITIVES
- US TSY 9Y-8M TIPS AUCTION: BID/COV 2.32
EURUSD TECHS: Slips Off High, But Uptrend Intact
Nov-21 18:00
- RES 4: 1.1081 76.4% retracement of the Jul 18 - Oct 3 downleg
- RES 3: 1.1065 High Aug 10 and a key resistance
- RES 2: 1.1005 High Aug 11 and 2.0% 10-dma envelope
- RES 1: 1.0965 High Nov 21
- PRICE: 1.0927 @ 16:22 GMT Nov 21
- SUP 1: 1.0825/0756 Low Nov 17 / High Nov 5, recent breakout level
- SUP 2: 1.0656 Low Nov 10 and key short-term support
- SUP 3: 1.0568 Low Nov 2
- SUP 4: 1.0517/0496 Low Nov 1/ 13
A bullish theme in EURUSD remains intact despite the pullback from the Tuesday high. Recent strong gains reinforce the current positive technical picture and the focus is on 1.1005, the Aug 11 high and 1.1065, the Aug 10 high and a key resistance. Moving average studies have crossed and are currently in a bull-mode position, highlighting positive market sentiment. The 14-day RSI has spilled over 70, flagging a technically overbought condition in the pair, which could explain the fade off Tuesday highs. Support lies at 1.0825, the Nov 17 low.
STIR: SOFR Call Spreads
Nov-21 17:56
- +20,000 SFRU4 97.00/98.00 call spds, 6.0
- +10,000 SFRM4 96.00/97.00 call spds, 6.0
