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Global Funds Outlook | Third Quarter 2019

‘Search for yield’ has emerged as the predominant driver of funds flows in the current low yield backdrop marked by a complicated global macro outlook and supportive central banks.

Global Funds Outlook | Second Quarter 2019

The dynamics of Global Investment Funds flows in 1Q19 can be characterized by a widening bond-equity divergence, and a visible moderation in inflows to EMs. Looking ahead, we expect EM outflows to continue at a moderate pace until global volatility eases. In a risk scenario, EMs to face more intense and persistent outflows.

Lower growth does not imply lower inflation

In the 3Q14 Inflation Report released today, the Brazilian Central Bank (BCB) reduced its forecasts for GDP growth in 2014, from 1.6% to 0.7% (consensus: 0.3%), and added that the economy will expand by only 1.2% in 2Q15. However, the monetary authority does not expect this sharper economic deceleration to take inflation down. Its inflation forecasts were left broadly unchanged, around 6.0% YoY at the end of both 2014 and 2015 and close to 5.0% in the middle of 2016. The tone and the wording of the document released today continue to support the view that the SELIC rate will continue at 11.0% for some time.