November 28, 2023
Rates fall as a result of IPCA surprise and asset reaction to inflation in US Jornal Midiamax

Rates fall as a result of IPCA surprise and asset reaction to inflation in US Jornal Midiamax

In the long run even sharper, interest rates closed. After yesterday’s Copom report raised short- and intermediate rates, November provided relief near the IPCA valuation site. The good news is that consumer inflation in the US is practically in line with expectations. In the interest rate curve, the market withdrew premiums to accelerate the pace of monetary tightening in the coming months, nullifying the bets for a 1.75 percentage point rise in February and already showing some potential for 1.25 points.

The deposit (DI) contract ratio between banks for January 2023 ended at 11.43% (regular) and 11.435% (extension). And 10.39% (extended). The DI ratio for January 2027 ended at 10.601% to 10.34% (regular) and 10.33% (extended).

Since last week, the market is ready to re-apply to the used levels, driven by weak activity data released, a move that was interrupted yesterday by the hawk considered Copom report. But, with a weak IPCA on Friday, it resumed the trend and, thus, closed with a significant fall in rates. Inflation in November was 0.95%, significantly lower than in October (1.25%), well below the average of 1.10%, which was 0.94% as a base. Inflation in food and beverages and black silver advertising was the main reason for the decline. The starting price was also positive.

Although the rate increased to 10.74% in 12 months, from 10.67% in October, the monthly result was celebrated after several months of negative surprises. “This is the first sign that we are entering a downward trajectory. We expect even lower rates in December. Investmentos, Newton Camargo Rosa, Cobom report points to a new increase of 1.5 percentage points in the base rate in February.

According to Greenpeace Investmentos, the curve in February already offers celiac tightness of less than 150 basis points. The price of 146 points represents an 85% chance of a 150 point increase and a 15% chance of a 125 point increase. The Celik terminal projection, which was 12.75% yesterday, is now 12.25% and 11.50%, up from 12% at the end of 2022.

The international environment also contributed to the continued decline in the curve. In the United States, last month’s consumer price index (0.8%) rose slightly above the consensus (0.7%), which was welcomed a few days later by the Federal Reserve’s monetary policy meeting. “Although I follow the perspective of a tapping acceleration next week, in the short term aggressive betting on higher interest rates has been reduced,” said Silvio Campos Neto, an economist from Tendency.