The electoral court (TSE) will hold three extraordinary sessions on the Dilma-Temer ticket trial
May’s IPCA consumer inflation will be released today at 9:00 AM (SP time). We forecast a 0.48% monthly rise, with year-over-year inflation slowing to 3.8% from 4.1%. The housing group will make up most of the rise, as a result of higher electricity tariffs (contributing 32 bps to the headline). Transportation and food prices are likely to contribute to the downside with negative readings. Inflation will thus continue its long-lasting course of decline, driven mainly by ample slack in the economy and the favorable food price shock. The main risks for inflation continue to be of political nature, especially on matters that would interfere with the Social Security reform process in Congress.
Paper cardboard dispatches (ABPO) rose 3.2% mom s.a. in May (our seasonal adjustment), up 5.8% yoy. It is one of the two most important coincident indicators for industrial production (the other being highway traffic of heavy vehicles). The result is better than other industrial production coincident indicators already released, so we raised our industrial production forecast to 0.1% mom/sa in May (from -1.0% before ABPO’s release).
The BCB placed the full offering of 8,200 FX swaps. After closing, the central bank called for a roll over auction of up to 8,200 contracts for today.