Brazil’s New Government and the Most Important Events in the 1st Week of 2023

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Bloomberg — The inauguration of Luiz Inácio Lula da Silva as Brazil’s new president, and of Fernando Haddad as the new finance minister, the maturity of government bonds, the new calendar of Treasury auctions, and the last Fed meeting move the first week of the year. See the highlights:

1. Induction of Lula

Luiz Inácio Lula da Silva is sworn in as President of Brazil in a solemn session of Congress this Sunday (January 1), at 3 pm, Brasilia time. He will make a statement to the nation and then proceed to the Planalto Palace, where he will ascend the ramp and make a speech.

With several heads of state expected to attend, the inauguration will take place under heightened security following the bomb threat in Brasilia last Sunday.

2. Haddad starts at the Treasury

On Monday (2), the new Finance Minister, Fernando Haddad, takes office in a ceremony scheduled for 9 am, Brasilia time. After a negative perception of Haddad’s choice for the post, investors have reacted more favorably to his recent statements.

They were well received the decision not to extend the tax relief on fuel for 2023 and the interview given to Globo on Wednesday (28), in which he expressed commitment to cut spending and deficit reduction in 2023. On Thursday (29), after being appointed Planning Minister, Simone Tebet said she will work in partnership with Haddad - the two posed together for a photo at the event.

3. Petrobras and Ibovespa

President-elect Lula said this Thursday (29) that defining the company’s board of directors “still takes some time” because of the legislation that governs state-owned companies. Appointed to the Ministry of Mines and Energy, Alexandre Silveira said the government wants to avoid the impact of fuel on inflation.

The new Ibovespa portfolio comes into force on Monday (2) and is valid until April. By the third preview disclosed, IRB Brasil (IRBR3) and Positivo (POSI3) should be out. No stock was included. The SulAmérica units (SULA11) ceased to be traded last 26th due to the incorporation by Rede D’Or (RDOR3).

Eletrobras (ELET3, ELET6) gathers shareholders in an Extraordinary General Meeting (EGM) on Thursday (5) to propose the redemption of PNA shares and the incorporation of controlled companies.

4. Treasury and Central Bank calendars

The year also starts with a massive R$ 276 billion maturities of public securities on Sunday (1). There will be R$ 146.2 billion in LTN and R$ 129.9 billion in NTN-F, according to data from the Central Bank site.

The Treasury opens the new bond auction calendar on Tuesday (3). With the Real among the best-performing currencies in 2022, the Central Bank has not yet begun to roll over swaps for the next maturity date. The agenda of indicators has as highlighted the industrial production of November, on Thursday.

5. Payroll and Fed

The international agenda brings as a highlight of the week the minutes of the last Fed meeting, to be released on Wednesday (4). The US labor market, crucial for the Fed’s strategy, may be analyzed with the release of the ADP survey on Thursday, and the payroll and salary income on Friday (6).

China is expected to release PMIs and trade balance in the coming days amid fears of Covid-19 escalation in the country.