The political environment continues to change quickly, maintaining considerable uncertainty. The Supreme Court votes on the impeachment proceedings were largely in favor of the government and nullified most of the steps already taken. The proceedings will be put on hold as the Congress will most likely be in recess until February. Work in Congress has not completely stalled, however. The Senate passed the repatriation bill and the 2016 budget with a fiscal target of a primary surplus of 0.5% of GDP (down from 0.7%). Both now need Presidential sanction. 

However, three events counterbalanced these advances. First, Finance Minister Levy stepped down to be replaced by Minister of Planning Nelson Barbosa who has more support from the PT, President Rousseff's party, but is perceived as a less orthodox economist who favors a looser fiscal policy. Second, Fitch cut the country's sovereign credit rating to below investment grade while maintaining a negative outlook, following Standard & Poor's September decision. Third, Carwash probe investigators searched PMDB members' houses and the party's premises in some States, which was poorly received initially, creating more uncertainty about the party's relations with the government. 

Separately, the activity data remained downbeat, with economic activity falling 0.6% in October and unemployment rising further in November. Meanwhile, inflation remains under upward pressure, as reported in the December IPCA-15 inflation release.