WEEKLY REPORT Challenging data week in Brazil and a lighter calendar in the United States – 02/27
✅ In Brazil, the week was marked by fiscal and credit data that, although broadly in line with expectations, reinforced a more challenging scenario and brought an upside surprise in inflation. The primary balance showed real expenditure growth above the limits set by the fiscal framework, highlighting greater budget rigidity and signaling that meeting the 2026 target will require additional effort. In credit, financial conditions became more expensive and delinquency increased, suggesting tighter constraints on demand ahead. The IPCA-15 surprised to the upside, driven by volatile items, but without meaningful deterioration in underlying services. In sum, the week brought signs of fiscal fragility, tighter financial conditions, and a point of attention in current inflation, but for now, it does not alter the narrative of gradual economic deceleration and disinflation throughout the year.
✅ In the U.S., the calendar was lighter, with the highlight being Donald Trump’s address to Congress, which carried an optimistic tone and focused on tax cuts and trade policy , without additional measures to address inflation. On the data front, the PPI once again surprised to the upside, both headline and core, reinforcing concerns about price pressures along the production chain and the potential pass-through to consumers. Producer inflation remains resilient, particularly in services and durable goods affected by tariffs. We maintain our scenario of two rate cuts, but acknowledge that the probability of fewer cuts by the Federal Reserve has increased in light of recent inflation data and the greater resilience of economic activity.
