(Imagem: iStock/Dilok Klaisataporn)
The rates of DIs with longer terms closed Monday with a strong rise, continuing the movement of the previous session, amid investor fears regarding the accounts of the president's government Luiz Inácio Lula da Silvawhile abroad the income of Treasuries oscillated close to stability.
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At the short end of the Brazilian curve, rates continued to price in the majority chances of a 50 basis point hike in the base rate Selic in November.
In the late afternoon, the rate of FROM for January 2025 was at 11.025%, compared to 11.029% in the previous adjustment, while the rate for January 2026 was at 12.275%, compared to 12.185%. The maturity for January 2027 was at 12.395%, compared to 12.249% in the adjustment.
Among the longer contracts, the rate for January 2031 was at 12.54%, compared to 12.381%, and the contract for January 2033 had a rate of 12.51%, compared to 12.348%.
On Friday, long-term rates had already soared, with investors unhappy with the Brazilian fiscal scenario and demanding higher premiums on DIs. The movement continued on Monday, with the curve reflecting the Revenue and Expenditure Report, released on Friday night.
In the document, the Ministries of Planning and Finance pointed out the need to increase the blocking of funds from ministries by 2.1 billion reais to comply with this year's spending limit, totaling a containment of 13.3 billion reais.
According to projections from the economic team, the central government will close 2024 with a primary deficit of 28.3 billion reais.
In a press conference on Monday morning, the executive secretary of the Ministry of Finance, Dario Durigan, stated that there is discomfort within the government's economic team regarding an alleged “irrationality” in the perception of economic agents regarding fiscal management.
He cited “poor speculation” amid criticism from analysts about creative ways to get around fiscal rules restrictions.
Despite the government's complaints, the market continued to place more premiums on the curve on Monday. The DI rate for January 2033 hit a high of 12.55% at 9:05 a.m., shortly after the opening, up 20 basis points from the previous adjustment.
“O Copom (Central Bank Monetary Policy Committee) The Selic rate went up at the meeting last Wednesday, and the market was watching to see if the long end would fall. Thursday came and Friday came, but there was no fall. On the contrary,” commented Gabriel Redivo, partner and managing director of Aware Investments.
According to him, concerns about the fiscal area supported the opening of the long stretch of the curve, and Friday's data was not well received.
“The government should be working on the fiscal aspect better, with cost reduction, and that is not happening. The long end reflects this,” added Redivo.
In New York, the Finance Minister, Fernando Haddadreinforced the government's commitment to fiscal balance. According to him, government spending remains within the framework's rules and the Executive will be able to meet this year's target for public accounts.
“We released the data from the fourth report (bimonthly revenue and expenditure) of this year, showing that expenditure is absolutely within the framework rule, limited to 2.5% growth compared to last year. We had good surprises in this fourth report,” he said.
After the comments of Haddad there was a reduction in pressure on the exchange rate, but long-term rates remained at high levels.
The short end of the curve continued to price in a 50 basis point increase in the Selic rate in November — something that, if confirmed, will represent an acceleration of monetary tightening, after Copom raised the basic rate by 25 basis points last week, to 10.75% per year.
Close to the close of this Monday, the Brazilian curve priced in a 100% probability that the BC would accelerate the Selic rate hike cycle in November, with an increase of 50 basis points.
In the morning, the BC's Focus report indicated that the median of market projections for the Selic rate at the end of 2024 is 11.50% — which, in practice, suggests that Copom will raise the rate by 75 basis points this year.
Inflation projections remain unanchored in Focus: 4.37% for 2024, 3.97% for 2025 and 3.62% for 2026.
Abroad, at 4:46 pm, the ten-year Treasury yield – a global benchmark for investment decisions – rose 2 basis points, to 3.743%.