PERU: BCRP Expected To Continue Gradual Easing Cycle Today
Oct-10 11:18
- Following the soft September CPI data, the BCRP is expected to deliver another 25bp cut to 5.0% at 0000BST/1900ET. Headline inflation fell to its lowest level since October 2020 last month, while core prices have shown no variation over the last two months, giving policymakers room to continue with their gradual easing cycle. Most analysts are forecasting a 25bp cut, although some see risks of a renewed pause amidst signs of a recovery in activity.
- The full MNI preview with analyst views is here.
- Nonetheless, mounting fiscal pressures could become a concern for policymakers going forward, as highlighted by the country’s Fiscal Council yesterday. The council reiterated its concerns about the continued deterioration in Petroperu’s finances, which is adding to fiscal risks for the government. They noted that the government is unlikely to hit its revised 2.8% of GDP fiscal deficit ceiling for this year.
- In other news, transportation companies in the country will strike today in protest of threats of extortion and contract killings.
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LOOK AHEAD: Tuesday Data Calendar: Non-Policy Fed Speak, 3Y Note Auction
Sep-10 11:07
- US Data/Speaker Calendar (prior, estimate)
- Sep-10 0600 NFIB Small Business Optimism reported 91.2 vs. 93.7 est, 93.7 prior
- Sep-10 1000 Fed VC Barr on Basel III at Brookings event (text, Q&A)
- Sep-10 1130 US Tsy $60B 42D CMB bill auction
- Sep-10 1215 Fed Gov Bowman on bank stress testing & capital buffers (text, Q&A)
- Sep-10 1300 US Tsy $58B 3Y note auction (91282CLL3)
OUTLOOK: Price Signal Summary - Trend Outlook In Gilts Remain Bullish
Sep-10 11:04
- In the FI space, Bund futures gapped lower Monday but managed to recover during yesterday’s session. The outlook remains bullish following last week’s rally and note that moving average studies are in a bull-mode position, highlighting an uptrend. Sights are on 134.95 next, 76.4% of the Aug 5 - Sep 2 bear leg. First support is 133.70, the 20-day EMA.
- Gilt futures traded higher last week and the price remains closer to its recent peak. The contract has pierced a key resistance at 100.30, the Aug 14 high. A clear break of this level would confirm a resumption of the bull trend and open the 101.00 handle. Moving average studies on the continuation chart remain in a bull-mode position, highlighting a dominant uptrend. Initial firm support to watch lies at 99.18, the 20-day EMA.
GERMANY: Fin Min-There Are Democratic & Fiscal Issues w/Draghi Joint Debt Call
Sep-10 10:57
Finance Minister Christian Lindner has just finished speaking in the Bundestag regarding the 2025 budget and the gov'ts 2024-28 fiscal plan. There has been focus on the German gov'ts response to former Italian PM Mario Draghi's report on EU competitiveness published on 9 September. Among the myriad recommendations, one of the most headline-grabbing was that without a major increase in joint debt issuance by the EU, the very Union will be at risk in the future.
- Lindner swiftly dispelled any prospect of Germany backing such action. Today he claimed that Germany is "the anchor of stability in Europe, if Germany broke EU fiscal rules, others would follow". Adds that the German gov't "sees democratic and fiscal problems in Draghi's proposal of EU joint borrowing".
- Lindner: 'The 2025 draft budget includes record investment of EUR81bn...[the budget] sets clear priorities, invests in what is important for companies and citizens.'
- On the submission of the budget, Lindner seeks to paper over evident cracks in the governing coalition: "As long as it is possible to reach an agreement, it is necessary to reach an agreement. Because the stability of Germany is not something to be taken lightly”.
- Speaking on the gov'ts spending plans, Lindner claims that "Germany will exceed NATO's spending goal in the years ahead". However, there has been speculation that the gov't will class seemingly-unrelated spending as defence expenditure in order to achieve the target. Last week, Suddeutsche Zeitung reported that the gov't would class some motorway repairs as defence spending.
