BRAZIL: Sell-Side Analysts Still Constructive On BRL, If No Major Retaliation
Jul-10 14:39
- Although Lula has called for the implementation of the country’s economic reciprocity law in response to Trump’s tariff threat, SocGen believes that he is more likely to negotiate than to opt for outright trade retaliation.
- In their view, if Lula focuses on constructive trade negotiations with the US, the BRL should not only recover but should even perform well, supported by the hawkish Copom, favourable external environment and constructive technicals. They also believe that swap rates should ease from their recent spike.
- Meanwhile, Goldman Sachs thinks that the impact of the tariff on Brazil and BRL should be limited: They note that Brazil is a relatively closed economy and exports to the US are only around 2% of GDP. They estimate a 0.3-0.4pp hit to growth from these tariffs assuming no major retaliation.
- The risk to inflation from a potentially weaker FX would have hawkish implications for the BCB and would mean BRL carry remains elevated and supportive of total returns.
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GILT AUCTION PREVIEW: On offer next week
Jun-10 14:31
The DMO has announced it will be looking to sell GBP4.5bln of the 4.375% Mar-30 Gilt (ISIN: GB00BSQNRD01) at its auction next Tuesday, June 17.
MNI EXCLUSIVE: Debt management head at Swedish DMO, speaks to MNI
Jun-10 14:20
Klas Granlund, debt management head at Riksgladen, the Swedish DMO, speaks to MNI about benchmarks and turbulence.- On MNI Policy MainWire now, for more details please contact sales@marketnews.com
FOREX: Dollar Dip Steers Market Clear of Test of Key Resistance
Jun-10 14:17
- USD Index heads into the London close at the lowest levels of the day: the index has shown through the overnight low of 98.8959, but remains clear of the weekly low and last week's pullback low of 98.3510.
- Today's price action keeps prices clear of a material test on key resistance stemming from the downtrendline drawn off the early February highs at 109.881 (today at 99.575) - a level that could draw additional interest on any hawkish repricing stemming from strong inflation prints at this week's CPI & PPI releases.
- Despite a busier European morning, FX futures volumes have faded fast into the NY crossover - extending the theme after a quieter market on Monday. Poor UK jobs data has helped GBP standout: futures have cleared volumes 30% ahead of average for this time of day, but both JPY and EUR markets are considerably quieter than usual.
- The upcoming 3y Treasury auction takes focus next, but the longer-end issuance on Thursday should prove of greater interest as the long-end of the curve across developed markets remains particularly sensitive and helps drive broader sentiment.
