The week is shorter, with holidays in the United States and Brazil. Already this Monday (5), the Stock Exchanges on Wall Street will be closed due to Labor Day. On Wednesday (7) there will be no negotiations at B3 due to the Independence holiday, a date that promises to be marked by political demonstrations. However, even with these pauses in financial market business, the next few days have relevant indicators.
Here in Brazil, the main data comes out on Friday (9): the Broad Consumer Price Index (IPCA), referring to the last month of August. The average projection of economists consulted by the Refinitiv points to another deflation, the second in a row, this time of -0.39%. Therefore, in the annual comparison, the IPCA would decelerate from 10.1% (from July) to 8.71%.
“The reading will show price deflation in fuel, electricity and communications, still reflecting tax cuts and cuts made by Petrobras in July and August,” says Mario Mesquita, chief economist at Itaú. According to the bank’s calculations, the reduction in fuel prices alone should have an impact of -0.74 percentage points on the index.
“Considering the prices set by the market, food at home should slow down because of milk prices. The core inflation of services, such as food outside the home and rents, should remain at high levels, but without accelerating too deeply. Goods inflation should continue to show a deceleration trend”, Mesquita wrote.
Before the IPCA, there is another inflation indicator on Thursday (8): the IGP-DI. For this, Itaú forecasts deflation of 0.81% in August compared to July. “The reading should continue to be impacted by tax cuts, showing strong deflation in consumer prices. Industrial items may show deflation, reflecting cheaper iron ore, diesel and gasoline”, says the economist at Itaú. Among the items of the agricultural industry, milk prices tend to decelerate, but continue to advance, while soybeans and meat should show deflation.
Ending the week, Friday will also bring the latest figures from the National Association of Motor Vehicle Manufacturers (Anfavea), referring to the month of August.
ECB to accelerate monetary tightening
On the international agenda, Europe, which has a full week, brings a large volume of indicators. In addition to a series of PMIs (Purchasing Managers’ Indexes), there’s the eurozone’s second-quarter Bruno Domestic Product (GDP) review, which will be released on Wednesday. the consensus Refinitiv believes that quarterly growth of 0.6% will be maintained. But the most awaited moment of the week is the meeting of the European Central Bank, which ends on Thursday (8) with another decision on interest rates.
“High inflation in the euro area should lead the monetary authority to continue the cycle of interest rate increases, accelerating the pace to a rise of 0.75 percentage point”, predict Bradesco analysts.
Jerome Powell speaks on Thursday
In the United States, eyes and ears are attentive to what Federal Reserve leaders will say throughout the week. On Thursday, Fed Chair Jerome Powell attends the “The State of Monetary Policy After 40 Years” event organized by the Cato Institute. the conversation with the chairman is scheduled to start at 10:10 am (Brasília time) and will be broadcast live over the internet. This will be Powell’s first public speech after his speech at the annual Jackson Hole symposium, which sent most of the market back to betting on a 75 basis point rate hike.
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Ahead of Powell’s speech, Federal Reserve Vice Chair Lael Brainard will also speak at an event on economic outlook and monetary policy on Wednesday. That same day, the Beige Book, a report on economic activity in the Fed’s districts, comes out.
Still on the international agenda, China’s indicators also stand out. New lockdowns were announced in the country last week and the data that will be released in the coming days promise to show how much the country’s economy still feels the restrictive measures. On Wednesday the country’s trade balance will be released, while on Thursday the producer and consumer price indices will be released.
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