BRAZIL: Lula Says Brazil Will Respond To Any US Tariffs, BCB's Galipolo Speaks
Feb-14 12:16
- Finance Minister Haddad said yesterday that the way the US government has announced tariffs has been confusing. He reiterated that the Brazilian government has adopted a wait and see approach to tariffs, emphasising that the trade balance between the two countries is relatively stable and favourable to the US. Meanwhile, VP Alckmin repeated that the government is studying the tariffs to discuss the matter with the US.
- Currently, President Lula is giving an interview with local radio, in which he has stated that the government will respond to any US tariff action against Brazil and will seek WTO support if there are any tariffs put on the country’s steel exports. Earlier this week, VP Alckmin said that trade quotas could be a potential alternative to US tariffs on steel and aluminium.
- No macro data are due today, with focus turning to December economic activity figures on Monday, which will be released after the latest BCB focus survey. Meanwhile, BCB Governor Galipolo is due to speak at an event with business leaders of Sao Paulo state at 1300GMT(0800ET) today. Elsewhere, President Lula will attend a public event to announce COP30 investments at 1400GMT(0900ET).
Want to read more?
Find more articles and bullets on these widgets:
Historical bullets
FRANCE: Bayrou Government Looks Set To Survive Censure Vote On Thursday
Jan-15 12:00
PM Bayrou’s government looks set to survive a censure vote on Thursday, alleviating some short-term widening risks in OATs against EGB peers. However, medium-term fiscal and political risks remain prevalent in France, limiting the case for OAT outperformance at this stage. OATs continue to underperform PGBs and SPGBs year-to-date, with the 10-Year SPGB/OAT/PGB butterfly currently at 53bps (vs 52bps yesterday and a cycle closing low of ~56.5bps).
- Bayrou’s address attempted to placate parties across the political spectrum. As a partial concession to the left, Bayrou announced a renegotiation of the 2023 pension reform. Local media has reported that the first debates on this topic will begin on Friday.
- Bayrou also advocated for a move towards proportional representation at the next legislative elections – a notion supported by the right-wing Rassemblement National party.
- The Bayrou government will target a 2025 fiscal deficit of 5.4%. This was at the upper end (though still within) the 5.0-5.5% range touted by Finance Minister Lombard last week. Budget Minister Montchalin has said this will entail E53bln of savings. Montchalin noted this morning that a budget will aim to be presented by the end of January.
- A reminder that ex-PM Barnier’s budget proposal entailed a 5% deficit and E60bln of savings.
- The far-left LFI party proposed a no-confidence motion against the government following the speech (as expected), which will be debated tomorrow at 1500CET and voted on at around 1730CET. It is not expected to succeed in ousting Bayou.
EQUITIES: EU Bank Index Highest since August 2015.
Jan-15 11:54
- Equities on both sides of the Pond are extending gains, following Earnings from Blackrock, BoNY, Wells and JPM.
- In Europe, although not the leading sector, the Bank Index {SX7E Index} is testing a fresh intraday high, and is extending to its highest level since mid August 2015.
(Chart source: MNI/Bloomberg):
OUTLOOK: Price Signal Summary - Corrective Cycle In Gold Still In Play
Jan-15 11:43
- On the commodity front, recent gains in Gold appear corrective. However, the yellow metal continues to hold on to the bulk of last week’s gains and scope is seen for a continuation higher near-term. A stronger recovery would open $2726.2, the Dec 12 high and an important resistance. On the downside, a reversal lower would expose $2583.6, the Dec 19 low. Initial support is at $2644.3, the 50-day EMA.
- In the oil space, the trend structure in WTI futures remains bullish and the contract is trading just ahead of its recent highs. The stronger reversal to the upside has resulted in a breach of key short-term resistance at $76.41, the Oct 8 high. Clearance of this hurdle strengthens a bull theme and opens $79.59, the Jul 5 ‘24 high. On the downside, a reversal lower would expose the 20-day EMA, at $73.15. This average is seen as a key short-term support.
