CHILE: Itaú Says Stage Set For Another Structural Deficit Miss This Year
Mar-05 19:44
- Following the large fiscal miss in 2024, when the structural deficit came in at 3.2% of GDP, (vs. the 1.9% target), Itaú notes that spending dynamics at the start of 2025 suggest that the MoF will follow a frontloaded strategy once again.
- The MoF’s Public Finance Report already forecasts a structural deficit of 1.6% of GDP, above the 1.1% target, which would imply a large negative fiscal impulse of 1.8% of GDP. In Itaú’s view, the most likely scenario is a revision to a somewhat watered-down structural deficit target for this year, and a spending cut of roughly 0.5% of GDP, which would contribute to meeting this year’s fiscal target.
- Revenues outperformed in January, rising by 9.6% y/y in real terms. However, real spending rose by 11.8%, with current expenditure up by 7.4% y/y and capex up by 97.1% y/y. Spending as a share of the annual budget reached 8.0%, the greatest over the last decade, and will have to slow later in the year to achieve the 2.7% annual spending forecast.
- As a result, the monthly fiscal surplus was only 0.1% of GDP in January, the smallest for the month in several years, keeping the 12-month rolling deficit at 2.9% of GDP.
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US STOCKS: Late Equities Roundup: Near Full Recovery, Mexico Tariff Delay
Feb-03 19:31
- US Stocks have been climbing off this morning's lows ever since Mexican President Sheinbaum said tariffs are paused for a month from now, having said Mexico had a "good" call with Trump, which led to some "accords".
- The Trump administrations quixotic trade policies remain uncertain for Canada, China and the EU for that matter amid mixed negotiation headlines Monday after Trump signed orders for 25% tariffs over the weekend on Mexico & Canada, 10% on China.
- Currently, the DJIA trades down 0.94 points (0%) at 44545.04, S&P E-Minis down 25.75 points (-0.42%) at 6041, Nasdaq down 154.9 points (-0.8%) at 19473.01.
- Health Care and Consumer Staples sectors continued to lead gainers in late trade, IDEXX surged +11.2% after beating earnings and providing positive 2025 guidance, Molina Healthcare +3.86%, AbbVie +3.46%. The Consumer Staples sector was buoyed by Kroger +2.7%, Costco +2.69%, Tyson Foods +1.98%.
- Conversely, Information Technology and Consumer Discretionary sectors continued to underperform: tech laggers included Super Micro Computer -4.14%, Apple -3.22% while Dell declined 3.13%. Weighing on the Consumer Discretionary sector: Tesla -5.01%, Wynn Resort -3.59%, NVR -3.31%.
- Reminder, another heavy earnings docket this week includes the following on Monday-Tuesday: PepsiCo Inc, Archer-Daniels-Midland Co, Snap Inc, Alphabet, Match Group, Amgen Inc, Advanced Micro Devices, Lumen Technologies, Chipotle Mexican Grill, Juniper Networks Inc.
USDJPY TECHS: Resistance Remains Intact
Feb-03 19:30
- RES 4: 159.45 High Jul 12
- RES 3: 159.26 0.618 proj of the Sep 16 - Nov 15 - Dec 3 price swing
- RES 2: 158.08/87 High Jan 15 / 10 and the bull trigger
- RES 1: 156.75 High Jan 23
- PRICE: 154.62 @ 16:48 GMT Feb 3
- SUP 1: 153.72/34 Low Jan 27 / Low Dec 18
- SUP 2: 152.55 61.8% retracement of the Dec 3 - Jan 10 bull leg
- SUP 3: 151.81 Low Dec 12
- SUP 4: 151.06 76.4% retracement of the Dec 3 - Jan 10 bull leg
The primary trend condition in USDJPY is bullish. However, the Jan 27 move down highlights a stronger bear threat. The pair has breached the 50-day EMA and a trendline drawn from the Sep 16 ‘24 low. A resumption of weakness would open 152.55, a Fibonacci retracement point. Initial firm resistance is at 156.75, the Jan 23 high. Clearance of this hurdle would be a bullish development.
EUROPEAN INFLATION: 2025 Weightings Update Marginally Decreased Inflation in Jan
Feb-03 19:23
The January 2025 Eurozone HICP flash release also contained a weightings update for the main categories (which we thought would only come with the final data). We estimate that this update contributed a negative 0.014 percentage points to this month's flash release when looking at the latest monthly changes (of -0.28% M/M for HICP), mostly on the back of a decrease in weighting of the energy category, which saw a sequential jump in January.
- In the coming months, however, the impact on headline inflation of the reweighting appears likely to be positive, as services, in which price growth is currently the highest out of the main categories on the yearly rate, received a weighting boost of around 0.75pp.
- Overall, the impact on headline inflation should be limited - that also applies for a weightings update of the subcategories, which appears yet to be released.
- Weighting comparison table see below:
