Brazils macro has weakened for years The fiscal imbalance is one - - PowerPoint PPT Presentation

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Jul 18, 2023 487 likes •553 views

Brazils macro has weakened for years The fiscal imbalance is one Unemployment has of the highest worldwide sharply increased 14 Mar-98 Mar-03 Mar-08 Mar-13 Mar-18 Dec-96 Dec-01 Dec-06 Dec-11 Dec-16 Sep-00 Sep-05 Sep-10 Sep-15

SLIDE 1

Brazil’s macro has weakened for years

The fiscal imbalance is one

f the highest worldwide

Source: Bloomberg, M&G, 30 June 2018 and 26 September 2018 (latest data available).

BONDVIGILANTES

Unemployment has sharply increased

2 4 6 8 10 12 14

Dec-04 Mar-06 Jun-07 Sep-08 Dec-09 Mar-11 Jun-12 Sep-13 Dec-14 Mar-16 Jun-17 Sep-18

Dec-96 Mar-98 Jun-99 Sep-00 Dec-01 Mar-03 Jun-04 Sep-05 Dec-06 Mar-08 Jun-09 Sep-10 Dec-11 Mar-13 Jun-14 Sep-15 Dec-16 Mar-18 Current Account Balance (%GDP) Fiscal Balance (%GDP) 2

SLIDE 2

B O N D V I G I L A N T E S

Source: Bloomberg as of 26 Sept. 2018.

Real: not disliking Bolsonaro chances

3.95 4 4.05 4.1 4.15 4.2 19 21 23 25 27 29 Bolsonaro vote intention % Real x USD (RHS)

SLIDE 3

B O N D V I G I L A N T E S

Source: Thomson, MSCI, 27th September

Brazilian equities

YTD performance: All about the FX

70 80 90 100 110 120 MSCI BRAZIL USD MSCI BRAZIL BRL

SLIDE 4

B O N D V I G I L A N T E S

Source: Bloomberg as of 26 Sept. 2018

Brazilian corporates: feeling the real hit

3 3.2 3.4 3.6 3.8 4 4.2 4.4 300 320 340 360 380 400 420 440 460 480 Real x USD Basis points Petrobras Z spread BRL x USD

SLIDE 5

B O N D V I G I L A N T E S

Source: Bloomberg as of 27 September 2018.

The week ahead

Monday: Final Eurozone Manufacturing PMI UK, Spain Manufacturing PMI US ISM Manufacturing Wednesday:Japan Services, Manufacturing PMI US ADP employment change Friday: US Unemployment rate US Change in Non-farm Payrolls