WEEKLY REPORT Slowing economic activity and a tightening presidential race in Brazil, while inflation remains elevated in the US – 16/10
✅ In Brazil, economic activity data reinforced signs of a slowdown. August’s sectoral indicators came in predominantly below expectations, with retail sales increasing by just 0.1%, services declining by 0.1%, and industrial production contracting by 0.6%. In contrast, the IBC-Br rose by 0.3%, above expectations. Despite the positive surprise, the result does not change the broader assessment of weakening economic momentum amid still restrictive financial conditions.
✅ On the political front, the presidential race has become more competitive, with Lula regaining ground in second-round polls. This comes amid an intensification of electorally appealing measures, including the approval of the constitutional amendment proposal to eliminate the six-day workweek followed by one day off (6×1) and debt renegotiation initiatives. With the race still open, Sunday’s presidential debate is gaining relevance in the final stretch of the campaign.
✅ In the United States, inflation data reinforced the persistence of price pressures. September CPI rose by 0.60%, with core inflation exceeding expectations, while the PPI increased by 1.34%, pointing to more widespread pressures throughout the production chain. Nevertheless, Kevin Warsh’s communication was interpreted as supportive of keeping interest rates unchanged in October. Against this backdrop, we maintain our expectation that the Fed will hold rates steady at the upcoming FOMC meeting.
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