Brazilian assets surf the global trend as economy improves - Rabobank

"In the week ending on Jan 12, most Brazilian assets kept surfing the positive global tide," Rabobank analysts note.

Key quotes

The BRL closed the week at 3.20/USD (+0.8%, strongest since late October), about in line with the average of key regional (and commodity producing) peers. The long end of the BRL yield also rallied, with premium still looking attractive for some tenors.

Last week saw economic releases from the tertiary sector confirming the baseline scenario of gradual economic recovery led by consumer spending. The inflation data showed a likely end to such a long patch food deflation, a key element (but surely not the only one) behind the subdued full-2017 reading of 2.9% (lowest since 1998). The recent CPI data boosted the chances that the rate-cutting cycle will end with a final 25-bp move (to 6.75%) in February.

In a relatively empty week in terms of economic data, and keeping activity on the spotlight, this week’s agenda features November IBC-Br (the BCB’s economic activity index) on Monday.