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This edition offers a comprehensive overview of recent developments that have significant implications for global markets. Philadelphia Federal Reserve Bank President Patrick Harker's recent proposition regarding potential interest rate adjustments has garnered considerable attention, reflecting broader discussions within the financial community. Furthermore, the Brazilian Senate's recent legislative action to refine corporate tax policies underscores the ongoing efforts to bolster national revenue structures. Concurrently, the Turkish central bank's steadfast commitment to monetary stability is evident as it prepares for its seventh consecutive rate adjustment amidst prevailing inflationary challenges.

– Matheus Zani & Daniel Porto

R&D Featured Article

Optimism Amidst Melancholy - Milei's Inauguration Shaping Argentina's Future

Our Head of FX Risk Management, Matheus Zani, shared his insights from his recent trip to Argentina. During his visit to Buenos Aires, he had the unique opportunity to witness the government transition ceremony. Engaging in conversations with the locals provided him with valuable perspectives and a deeper understanding of their sentiments as Argentina steps into this new era.

2. Brazil Senate Approves Tax Bill to Boost Revenue Amid Fiscal Adjustments

Brazil's Senate passed a bill to enhance tax revenue by preventing companies from using state-granted corporate tax breaks to lower federal taxable income. This step aligns with the government's goal to eliminate next year's primary budget deficit. President Luiz Inacio Lula da Silva's signature is awaited, having received approval from the lower house last week. The bill also revises interest on equity (JCP) deductions, limiting companies from deducting shareholder payouts from taxes. Initially targeting an extra 45.8 billion reais ($9.32 billion) in 2024, amendments by lawmakers reduced this figure. Despite Congress's changes, Finance Minister Fernando Haddad expects 35.3 billion reais in 2024 revenue from corporate tax modifications. Haddad previously mentioned potential administrative actions to compensate for the lost JCP revenue.

3. Turkey's Central Bank Poised for Seventh Consecutive Rate Hike Amid Economic Reforms

Turkey's central bank is poised to raise interest rates for the seventh consecutive time to combat surging inflation. If consensus prevails, Turkey's rate hike tally for the year will reach 34 percentage points. This shift follows President Recep Tayyip Erdogan's reelection and the subsequent economic overhaul led by central bank Governor Hafize Gaye Erkan and Finance Minister Mehmet Simsek, both ex-Wall Street professionals. This proactive approach aims to counteract years of lax monetary policies, which previously deterred foreign investment and resulted in staggering inflation rates. Major banks like Deutsche Bank AG and JPMorgan Chase & Co. forecast Turkey's bonds to outperform other emerging markets in 2024 due to these reforms. Despite a current inflation rate of 62%, Erkan remains optimistic, projecting a drop to 36% by year-end 2024.

Charted Territory

What to look out for today

BRL - BCB National Monetary Council Meeting
GBP - CBI Distributive Trades Survey (Dec)
USD - GDP (Q3)
USD - Initial Jobless Claims
USD - PCE Prices (Q3)
USD - Fed's Balance Sheet

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