With the PEC of Precatório, services and Copom data, the Ibovespa rises and the dollar falls

The domestic market works in the positive field this Tuesday (14). The Ibovespa operates with gains of 0.81%, at 108,264.97 points. Investors are keeping an eye on the processing of the PEC on Precatório in Congress, while they digest the minutes of the Copom (Monetary Policy Committee) and the data on the services sector in Brazil.

The dollar also retreated against the real, after the release of the minutes in which it stated that the Central Bank assessed a more intense adjustment in the Selic rate than the 1.5% increase promoted last Wednesday (8). The US currency was devaluing 0.67%, quoted at R$ 5,639, around 11:55 am, Brasília time.

PEC of Precatório

The Chamber must still vote today on the changes made by senators in the PEC dos Precatórios.

If the Chamber does not approve the deadline stipulated by the Senate for the “sub-ceiling” to be in effect, the payment of precatório will be without a defined deadline, said the leader of the Chamber government, Ricardo Barros (PP-PR).

Barros said that the deadline for payment of court orders must be approved by the Chamber as 2026, otherwise, there is a risk that payment will run out of time.

For the opposition, pushing the payment of court orders is creating a “snowball” for the debt in the coming years. “It’s like someone who receives the bill for the card, pays a part and throws all the rest for the next month, with interest, and thinks that the bills are up to date”, compares Deputy Alessandro Molon, leader of the Opposition in the camera.

service data

Activity in the service sector – the one with the greatest weight in the Brazilian economy – frustrated expectations and contracted at the margin for the second consecutive month in October, with data for September being revised downwards, in a combo that adds to recent indicators pointing to a cooling of the recovery while inflation remains high and financial conditions are tighter.

The October retraction was the strongest for the month since 2016 and the most significant for any month since last March.

The volume of services provided in Brazil retreated 1.2% from September to October, accumulating a 1.9% retraction considering the fall in September, IBGE data showed seasonally adjusted this Tuesday.

Compared to October 2020, there was an increase of 7.5%, with growth in four of the five activities and the eighth consecutive positive rate.

Analysts consulted by Reuters projected a monthly increase of 0.1%, with a gain of 9.5% compared to the previous year.

With the negative result in October, the segment reduced the distance in relation to the pre-pandemic level – it is now 2.1% above this line, from 3.3% in September and 4.1% in August – and is now 9.3 % below the record achieved in November 2014.

Four of the five activities investigated decreased in October, with emphasis on information and communication services (-1.6%), which presented the second consecutive negative rate, accumulating a decrease of 2.5% in the period.

“The segment that showed the main negative impact was telecommunications. This drop is explained by the readjustment in fixed telephony rates, which increased by 7.33% this month. This pressure coming from prices, ended up impacting the volume indicator of the sub-sector”, said the manager of the services research.

Inflation has also remained the villain in explaining part of the drop in passenger air transport service, according to Rodrigo Lobo, manager of the Monthly Survey of Services (PMS) of the Brazilian Institute of Geography and Statistics (IBGE), which has been falling for two consecutive months. after ticket prices increase.

Dollar and Copom

In the Copom minutes, released earlier this Tuesday, the BC reaffirmed that it will take interest rates to territory that promotes not only disinflation, but also anchoring expectations around the targets, and again even made comparisons between scenarios involving stronger adjustment rhythms and frames in which the interest rate remains high for a longer period.

Market participants interpreted the document as tougher on inflation than the monetary policy statement released last week, when the autarchy set the Selic rate at 9.25% a year.

“No one in the markets discussed greater adjustments (than 1.50 percentage point in the Selic rate), but smaller ones”, commented Gustavo Cruz, strategist at RB Investimentos, citing market participants’ concerns about the impact of the current interest rate increase cycle on economic activity in Brazil, which has already shown signs of faltering.

With a more aggressive tone from the Central Bank, projections for the level of the basic interest rate at the end of the monetary tightening process should increase, said Cruz. “This rate on Focus below 12% should not last that long.”

Bacen’s latest weekly Focus bulletin, released on Monday, projects a Selic rate of 11.50% at the end of 2022.

Higher interest rates in Brazil are, in theory, beneficial to the real, as they tend to attract more resources to the country by increasing the profitability of the fixed income market.

But investors did not rule out risks for the Brazilian currency, amid domestic fiscal uncertainties and the approaching presidential elections of 2022.

and information from Raphael Coraccini and Basília Rodrigues, both from CNN