2023-04-14 22:50:01
SÃO PAULO (Reuters) – After the recent closing of the forward curve, interest rate futures contracts ended this Friday’s session on a high, with investors adjusting positions and taking profits, on a day marked by empty news in Brazil and by the increase in Treasury yields.
During the week, the rates of DIs (Interbank Deposits) exhibited consistent falls, in the wake of the slowdown in inflation in Brazil and the optimism surrounding the new fiscal framework. As of Thursday, the contract rate for January 2026 alone had dropped by 36 basis points, for example.
This Friday, however, there was some recomposition of rates, albeit in limited intensity. The DI rate for 2026 rose by 10 basis points.
“The market is reversing the strong movement of the last few days, because we had a very strong closing in the curve, especially after the IPCA with a good composition, which made the market price cuts in interest rates faster”, commented Wagner Varejão, investment specialist and a partner at Valor Investimentos.
On Tuesday, the Brazilian Institute of Geography and Statistics (IBGE) had released the IPCA for March, up 0.71%, after advancing 0.84% in February. The data triggered the withdrawal of premiums from the curve, with investors pricing in greater chances of the Central Bank starting the process of cutting the basic Selic rate in the short term, currently at 13.75% per annum.
“After a strong move like that, there is usually a correction. This is normal”, said Varejão, justifying the increase in rates this Friday.
At the end of the afternoon, the DI rate for January 2024 was at 13.19%, compared to 13.16% in the previous adjustment. The DI rate for January 2025 was at 11.885%, compared to 11.776%. Among the longer contracts, the rate for January 2026 was at 11.645%, compared to 11.54% in the previous adjustment and the rate for January 2027 was 11.745%, compared to 11.645%.
Close to closing, the forward curve priced in a 7% chance that the Central Bank would reduce the Selic rate by 0.25 percentage points at the May monetary policy meeting and a 93% probability that it would keep the rate at 13.75% per annum .
Even though they have risen, rates have remained at much lower levels than those seen a few weeks ago. A month ago, on March 14, the DI adjustment for 2026 was 12.338% – or 69 basis points above the one verified at the close of this Friday.
Behind this premium withdrawal movement is a more favorable environment abroad and optimism in Brazil with the new fiscal framework.
Even if the government’s proposal is the target of criticism and distrust on the part of the market, the assessment of professionals heard by Reuters in recent days is that having a fiscal rule, even if it fails, is better than not having one.
In the morning, the IBGE reported that the service sector in Brazil contracted by 3.1% in January compared to December. For some analysts, the sector is already starting to feel the strongest effects of the high Selic rate.
Abroad, Treasury yields rose this afternoon, after data suggested that the US economy is not slowing down fast enough to prevent the Federal Reserve from raising interest rates again at the next monetary policy meeting.
US retail sales fell 1.0% last month, compared with a 0.4% drop forecast by economists polled by Reuters. US consumer confidence rose this month to 63.5, according to a preliminary survey by the University of Michigan for April.
In addition, comments by Fed Governor Christopher Waller, saying that higher borrowing costs are needed to restore inflation to the 2% target, further bolstered the US interest rate hike outlook and reduced easing bets. in this year.
At 4:38 pm (Brasília time), the ten-year Treasury yield – a global benchmark for investment decisions – rose 6.80 basis points, to 3.5185%.
(By Fabrício de Castro)
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