Brazil: Mixed picture of the economy – Rabobank

Analysts at Rabobank note that for the week of Mar 19 – 23, Brazilian assets painted a mixed picture of the economy.

Key Quotes

“On one hand, the sell-off and underperformance in BRL (-1.0% to 3.32/USD) and CDS (+25bps to 172bps) reflected (largely) a global de-risking and (slightly) increased doubts about the electoral outlook.”

“On other hand, the belly of the (DI) yield curve rallied (15-20bps around 2020s/2021s) on the back of a surprising BCB signal of another rate cuts on the plans for the May policy meeting.”

“The coming week features important monetary policy events such as the publication of the Copom minutes (Tue) and 1Q18 inflation report (Thu). Both will give more information about the BCB’s scenario assessment and policy guidance. Yet the flight plan seems quite clear after last week’s policy statement.”