Long futures contract rates fall against the trend abroad By Reuters

Long futures contract rates fall against the trend abroad By Reuters

2023-06-02 21:46:05

© Reuters. 1 real coins 10/15/2010 REUTERS/Bruno Domingos

By Fabrizio de Castro

SAO PAULO (Reuters) – Interest rates on futures contracts closed this Friday at a low in the long leg, against the grain abroad, where Treasury yields rose after the release of new US data and the approval of the US debt ceiling.

On the short end, future interest rates ended the session very close to stability.

On Thursday night, the US Senate passed bipartisan legislation championed by President Joe Biden that lifts the government’s $31.4 trillion debt ceiling, preventing what would have been the first default in the country’s history.

The Senate voted 63 to 36 to approve the bill that had been passed on Wednesday by the Chamber of Deputies. Now, the text goes to Biden’s sanction.

This Friday morning, the US Department of Labor released mixed data on the labor market, which also had an impact on global negotiations. Job creation beat expectations in May, but wages have moderated.

In the US bond market, investors latched on to the job creation data, which raised expectations that the Federal Reserve could follow through with its rate hikes. Thus, the US yield curve opened.

“There is even a great difficulty in justifying this downward movement in future rates in Brazil, which goes against the grain of the global movement. Global interest rates are opening up”, pointed out the chief economist at Ativa Investimentos, Étore Sanchez.

According to him, some of the most recent domestic news is considered positive, such as those linked to tax reform and the new fiscal framework, which favors a negative bias for interest rates.

At the same time, this Friday saw the second consecutive session of firm decline against the real, in a day of search for higher risk assets, such as currencies from emerging countries and shares of the stock exchange.

By late afternoon, the DI rate for January 2024 was at 13.205%, compared to 13.195% in the previous adjustment, while the DI rate for January 2025 was at 11.47%, compared to 11.455% in the previous adjustment. Among longer contracts, the rate for January 2026 was at 10.8%, compared to 10.836% in the previous adjustment, and the rate for January 2027 was 10.77%, compared to 10.874%.

Close to closing, the forward curve priced in a 9% chance that the Central Bank would reduce the Selic rate by 0.25 percentage points at the June monetary policy meeting and a 91% probability that it would keep the rate at 13.75% per annum .

Abroad, Treasury yields continued to rise.

At 4:35 pm (Brasília time), the yield of the –global benchmark for investment decisions– rose 8.30 basis points, to 3.6907%.

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