The dollar starts the session this Wednesday (14th) on a high, with investors reacting to nominations considered less close to the market economy, such as that of PT member Aloizio Mercadante for the BNDES, and statements by president-elect Luiz Inácio Lula da Silva (PT) against privatizations.
Investors are also waiting for new names for the economic team of the future government. The concern is that an increase in spending in the new administration could lead to a lack of control of the public debt, which would cause a rise in interest rates and a drop in investments, among other consequences.
The monetary policy decision by the US central bank (Federal Reserve), which should increase the US interest rate again, although less intensely compared to recent months, also attracts the attention of financial agents.
At 9:09 am, the spot dollar advanced 0.60%, to R$ 5.3416 in the sale. At B3, at the same time, the dollar futures contract with the first maturity rose 0.87%, to R$ 5.3610.
The Central Bank will hold an auction of up to 16,000 traditional exchange rate swap contracts in this trading session for the purpose of rolling over the maturity of January 2, 2023.
On the eve, after registering a fall of more than 1% against the real in the afternoon, the weakening movement of the dollar lost strength after the president-elect confirmed the name of Aloizio Mercadante as head of the BNDES (National Economic Development Bank and Social). The currency ended trading on Tuesday (13) with a slight drop of 0.03%, at R$ 5.3100 for sale.
The Brazilian Stock Exchange, which was up around 1% on Tuesday afternoon, in the wake of lower-than-expected inflation data in the United States, reversed its trend towards the end of the trading session to close with a drop above 1% .
The Ibovespa index, which rose about 1% during the day, fell 1.71% at the close of Tuesday (13), at 103,539 points, the lowest closing level since the beginning of August. With the fall, the Ibovespa started to accumulate a 1.2% drop in the year.
In the futures interest market, which incorporates investors’ expectations about the conduct of monetary policy by the BC (Central Bank), rates rose sharply. The bond maturing in January 2024 advanced from 13.97% to 14.05%, while the contract for 2025 increased from 13.41% to 13.64%.
The nomination of the names of PT politicians seen as more favorable to the expansion of public spending to command strategic areas of the economy has caused discontent among investors — on Friday, Lula had already confirmed Fernando Haddad as his finance minister.
“Aloizio Mercadante, I saw some criticisms about you, about rumors that you are going to be president of the BNDES. I want to tell you that it is no longer a rumor: Aloizio Mercadante will be president”, said Lula.
The president also declared that “privatization will end in this country”.
On Monday (12), fears that the government will adopt a more interventionist economic policy than was expected by the market until then, raising concerns about fiscal sustainability, led to a sharp decline in the Stock Exchange and an increase in the dollar and interest rates. .
After the negative reaction from the financial sector, Haddad said on Monday night that he must “compose a plural team”. “I don’t want a school of thought running the economy,” Haddad said. The former president of Banco Fator Gabriel Galipolo accepted this Tuesday the invitation to assume the executive secretary of the Ministry of Finance.
“Although Haddad’s intention with this is to make Galípolo an intermediary with the financial market, his ideological bias is much more linked to the hard core of the PT than to market economists. Both in his academic works and in public statements, Galípolo showed against some costly measures for the market, such as the independence of the Central Bank and the maintenance of the Spending Ceiling”, point out the analysts of Guide Investimentos in a report.
News that the government is discussing modifying the State-Owned Companies Law to allow political appointments, such as that of Aloizio Mercadante for the BNDES and PT senator Jean Paul Prates for Petrobras, are at the center of these concerns, in a scenario in which the market is looking for clues on defining the Lula 3 management team and the fiscal policy to be adopted.
“The main concern that the market has been demonstrating is the entry of someone with an ideological profile aimed at protecting industrialization, with intensive use of public resources for investments within the structures of public companies”, commented Igor Cavaca, head of investment management at Warren .
During the campaign, Lula already defended a more active role for the BNDES during his new term. Last week, Mercadante himself defended that the bank needs to return to acting strongly in the reindustrialization process.
On Monday, however, during a meeting with the president of Febraban (bank federation), Isaac Sidney, the PT would have stated that the future government will not repeat a subsidy policy.
Rumors about the composition of the economic team provoke a sharp break in the expectation that the Lula 3 administration would present names historically committed to a more restrictive fiscal policy.
Mercadante, in turn, stated that he is unaware of “any initiative” on the part of the elected government to amend the State-Owned Companies Law. As the petista acted in Lula’s campaign, his nomination for a state-owned company could come into conflict with the legislation.
This is because the law says that “it is forbidden to appoint, to the Board of Directors and to the board of directors, the person who acted, in the last 36 months, as a participant in the decision-making structure of a political party or in work linked to the organization, structuring and carrying out election campaign”.
Economist and former Minister Nelson Barbosa, one of the coordinators of the Technical Group (WG) for Economics, said he had no opinion on a change in the State-Owned Companies Law, and added that the matter was never discussed in the WG. He stated, however, that the theme will be evaluated by the committee of the Ministry of Planning, which is where the secretariat for state companies is located.
Barbosa also criticized this Monday the market’s reaction to the possibility of Mercadante occupying a vacancy in the new government.
The former minister said that the financial sector reacts badly “to any PT name”, but that it needs to accept that the party won the presidential elections.
In the minutes of last week’s Copom (Monetary Policy Committee) meeting released this Tuesday, the BC (Central Bank) stated that the impact of “significant fiscal stimuli” tends to be greater on inflation than on economic activity in a low idle environment.
The document also warns that the tax may affect the country’s neutral interest rate.
“The Committee judged that there is still a lot of uncertainty about the prospective fiscal scenario and that the moment requires serenity in the assessment of risks. The Committee reinforces that it will continue to monitor future developments in fiscal policy and their potential impacts on the dynamics of prospective inflation”, he stated. .
US stocks rise on lower-than-expected US inflation in November
In the United States, the day was bullish on the main Stock Exchanges, after lower-than-expected inflation data encouraged investors.
US consumer prices rose 0.1% in November, missing the 0.3% forecast by economists polled by Reuters.
In the 12 months through November, the Index rose 7.1%, the lowest rate since December 2021, showing a slowdown from the 7.7% rise seen in October.
Lower inflationary pressure increases the chances of the US central bank (Federal Reserve) slowing the rate of interest rate hikes as of the meeting scheduled for this Wednesday (14th), bringing relief to stock prices.
After four increases of 0.75 percentage points, taking interest to a range between 4% and 4.25% per year, the expectation of financial agents, reinforced by the inflation data released today, is an increase of 0.50 Score.
In this scenario, the Nasdaq, with the highest concentration of technology companies, advanced 1.01%, the S&P 500 appreciated by 0.73%, and the Dow Jones rose 0.30%.
With Reuters
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