June 14, 2024

Direct Treasury: Inflation bonds reach 6.45%, with the market following the details of the new financial rule

4 min read
Direct Treasury: Inflation bonds reach 6.45%, with the market following the details of the new financial rule
fixed income

The prefix 2033 offers the highest interest rate, at 13.19%, up from 13.16% the day before.

Neddy Martingo

Friday (17), which marks a week of major turbulence, is drawing to a close with the market focusing on the banking crisis and the new financial framework. President Luiz Inácio Lula da Silva is meeting today with the government team to discuss the long-awaited proposal. The announcement should be made in the coming days.

The next few days will promise. The Monetary Policy Committee (Copom) of the Central Bank meets on Wednesday (22) to set the interest rate.

Continue after the announcement

And in the international arena, next Wednesday, the meeting of the Federal Reserve (Federal Reserve, the US Central Bank) will be held, which will clarify the direction of monetary policy, after the fluctuations caused by the banks. Investors have lost faith in US regional banks and Credit Suisse in Europe in the wake of the crisis that began with the collapse of Silicon Valley Bank in the US a week ago.

In the direct treasury, at 3:32 PM, the only address showing an increase in yield was Prefixed 2033, an asset that also offered the highest interest rate, at 13.19%, up from 13.16% this Thursday (16). The floor was delivered by Prefixed Treasury 2026, at 12.32% annually, down from 12.39% in the previous session.

Continue after the announcement

All inflation-related securities are down compared to yesterday’s close. Treasury’s IPCA+ 2045 offered a yield of 6.45% annually, down from the previous day, which posted a value of 6.51%.

Check out government bond prices and rates available for purchase from Treasury Direct on Friday afternoon (17):

Source: Direct Treasury


On Wednesday (22) the next meeting of the Monetary Policy Committee (Copom) of the Central Bank will be held, which will determine whether there will be an increase or maintenance of the negative interest rate, which is currently 13.75% annually. The next meeting will take place in a delicate macroeconomic context. On the other hand, the latest reading of the IPCA recorded an acceleration of inflation and a deterioration in composition, which showed a more flexible rise in prices. But, on the other hand, there is a complex credit scenario here and abroad,” says Antonio van Moorsel, chief strategist and partner at Acqua Vero.

Continue after the announcement

According to him, this provides the kuboum with a new technical argument to defend lower interest rates and comply at the same time with the government’s desire, without it being possible to say that the central bank has succumbed to political pressure.

It is possible to explain that the collapse of the two banks could lead to a tightening of financial conditions, a slowdown in inflation and the global economy. In addition, in the financial area, there are other factors that support the references to smooth cuts. For example, the resumption of fuel taxes, even if it is partial.

Thus, Van Moorsel points out, the expectation of the decision is to maintain the interest rate at 13.75% annually and a signal from the central bank to start cutting the rate over the next few months, depending on macroeconomic developments.

Credit and GDP

The forecast for the increase in gross domestic product in 2023 has increased from 2.1% to 1.61%, according to the Ministry of Finance. The new forecast reflects a slowdown in industry and the service sector.

The credit scenario was one of the main factors that made the government’s project lead to a slowdown in GDP. “Credit is very high, which makes activities and investments useless,” says Guilherme Santos Melo, Secretary for Economic Policy at the Ministry of Finance. He added that the government is committed to restoring credit in the country.

The minister added that Brazil’s inflation rate is lower than many countries: “We are detached from the real interest rate.” According to Milo, this translates into a slowdown in economic activity.

Unemployment rate

The unemployment rate in Brazil was 8.4% in the moving quarter ending in January, which is practically stable with respect to the unemployment rate verified in October (8.3%). In December, the rate was 7.9%. The data is from the National Continuous Sample Household Survey (PNAD) and was released on Friday (17) by the Brazilian Institute of Geography and Statistics (IBGE).

The data was slightly higher than expected by the market, which expected a vacancy rate of 8.3%, according to the Refinitiv consensus.

The rate for the November-January period is the lowest recorded by the International Statistical Institute since 2015. Compared with the same quarter of the previous year, there was a decrease of 2.9 percentage points.

American industrial production

The Federal Reserve said on Friday that industrial production in the United States remained unchanged in February compared to January, but fell by 0.2% compared to February 2022. The monthly data came in worse than expected by the Refinitiv consensus, which had expected a 0.2% increase in production. February.

In February, industrial production rose by 0.1% and the mining sector index fell by 0.6%, while service production rose by 0.5%.

Organization for Economic Co-operation and Development

The effects of the restrictive monetary policy led by central banks around the world are beginning to be felt in the banking sector, according to the Organization for Economic Co-operation and Development (OECD) in a report released on Friday, 17.

The document notes that anti-inflationary monetary tightening is one of the central risks to global growth, given the uncertainties about the scope and duration needed for a restrictive cycle to sustainably reduce inflation.

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