Brazil inflation to top 5% upper band: economist survey

US stocks kicked off the week in the green as the market largely shook off omicron concerns from the previous week. The DOW led gains, up 1.87% while the S&P and the NASDAQ rose 1.17% and 0.93% respectively. Yield on 10Y USTs closed 9bps higher at 1.4342%

British retail sales grew 5.0% YoY in November as consumers piled onto early Christmas shopping; the figure eclipsed the 2.2% growth over the three months to November but was lower than the 12-month average of 9.9%. The pound closed firmer at $1.3264 while yield on 10Y UKTs was about flat at 0.738%.

Asian stocks were buoyant on Tuesday as market looked to shake off concerns that omicron could derail economic recovery. The HANG SENG led gains, trading 2.72% higher as the session wound down while the NIKKEI put in a similarly strong 1.89% gain even as household spending for October came at a slightly 3.4% growth against an expected 3.6%. The ASX also firmed 0.95% with the RBA saying that omicron will not derail the recovery path during its December MPC. The CSI likewise rose 0.60% with November exports growing 22% YoY albeit with an even bigger 31.7% rise in imports.

Brazilian economists see end-2022 inflation higher at 5.02% even as the central bank is expected to raise the Selic by 150bps at Wednesday’s MPC meeting; the 5.02% estimate is above the 5% upper bound of the 2022 inflation range. Adding to the complexity of the move, the economy entered into a recession after posting a 0.1% contraction in Q3 (Q2 growth was revised to -0.4%) thus the bank will have a balancing act with taming inflation and not further damping economic activity. The real closed weaker at 5.6860 to the dollar while yield on BRAZIL 30s was slightly higher at about 4.51%.