PERU: Finance Minister Salardi Targets 4% GDP Growth, Aided By Tax Incentives
Mar-07 12:43
- Finance Minister Jose Salardi said yesterday that he will introduce tax cuts as he continues to target 4% GDP growth this year. This would be an improvement on 3.3% growth last year and would mark the fastest pace of growth since the pandemic rebound.
- Salardi said that the tax incentives will target key sectors, including agriculture, forestry and fishing. He will also create a special economic zone near the new $1.3bn Chinese-owned Chancay port that is expected to increase trade significantly with China. Salardi said that the special economic zone would carry a 0% income tax from the onset.
- On the fiscal front, the government is still targeting a 2.2% of GDP deficit this year, which would mark a notable improvement from a 3.6% deficit last year. Last year’s deficit was above the 2.8% fiscal ceiling, a miss that Salardi described as temporary.
- In terms of the macro calendar, the next event of note is the BCRP monetary policy meeting on Thursday. The drop in CPI inflation to its lowest level since September 2018 keeps the door open to a 25bp rate cut next week, although the central bank is very near to the end of its easing cycle now and a further pause would be no surprise.
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STIR: Bank Of America Continue To Like Receiving Dec OIS
Feb-05 12:41
Bank of America continue to like receiving Dec ECB-dated OIS (target: 1.30%, stop: 2.05%).
- They write “the ECB continues its dovish shift, consistent with the deterioration in the outlook: (1) GDP disappointed; (2) consumers remain cautious; (3) tariff risks weigh on prospects.”
- They believe that the Bank’s “comments on the neutral rates suggest: (1) policy rates are still restrictive; (2) the ECB is not necessarily "only" normalising policy rates.”
- As a result, they see “a low hurdle for 2.00% rates by mid-year, absent any energy price shock”, noting their economists still forecast a 1.50% deposit rate come September.
EGB OPTIONS: OEH5 118.00/117.50/11.00 Put Fly Lifted
Feb-05 12:33
OEH5 118.00/117.50/117.00 put fly paper paid 11.5 on 8K.
OUTLOOK: Price Signal Summary - Bund Bull Cycle Remains In Play
Feb-05 12:33
- In the FI space, Bund futures remain in a bull cycle and the contract has traded higher today. Price has recently cleared resistance at 132.22, the Jan 22 high, and is through both the 20- and 50-day EMAs. The break higher confirms a resumption of the corrective bull cycle that started Jan 14. This signals scope for an extension towards 133.73, 50.0% of the Dec 2 - Jan 14 bear leg. Firm short-term support has been defined at 131.00, the Jan 16 / 24 low. First support is at 132.23, the 20-day EMA.
- A bullish corrective phase in Gilt futures remains in play, signalling scope for a continuation higher near-term. Last week’s high print and Monday’s climb, reinforce current conditions. The contract has traded through 93.09, the Dec 20 high. Sights are on 93.64, 61.8% of the Dec 3 - Jan 13 bear leg. First support is 92.17, the 20-day EMA.
