May 30, 2023

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Treasury Direct: Government bond prices rise in second place, with inflation concerns in Brazil and around the world

São Paulo – With investors’ interest in global inflation, bolstered by rising energy prices, combined with concerns about the domestic scenario, price advances and uncertainties about fiscal policy, the rates of government bonds in circulation in the direct treasury rose on Monday (11).

With the agenda emptied of economic indicators today, on the eve of the Nossa Senhora Aparecida national holiday, investors clung to revised expectations for inflation and interest rates. For the 27th consecutive week, financial markets have raised their expectations for the Broad Consumer Price Index (IPCA), according to this morning’s Focus report from the Central Bank (BC).

On the international stage, markets have operated at a slow pace, with business down due to Columbus Day, a holiday in the United States. However, investors were paying attention to the new spikes in the prices of commodities such as oil, given the consequences of the energy crisis in continents such as Europe.

In the update at 3:22 PM, the fixed-rate bond due in 2024 yielded a return of 10.02% annually, compared to 9.94% annually recorded in the last session, Friday (8). Papers maturing in 2031, which paid an interest of 10.88% per annum on Friday, are currently trading at 10.95% per annum.

In inflation-linked bonds there has also been an increase in interest rates. In the morning, four papers deliver rates above 5% per year, plus the IPCA difference – in the afternoon, there were only two papers.

This is the case of IPCA + Treasury with semi-annual interest maturing in 2040 (5%) and IPCA + Treasury with semi-annual interest maturing in 2055 (5.06%).

IPCA+ Treasuries due in 2035 and 2045, which traded at 5.01% annual rates in the morning, cut their afternoon wages to 4.99% annually.

Check rates and updated rates for all government bonds available for purchase at Tesouro Direto on Monday afternoon (11):

Focus Report

The financial market, for the 27th consecutive week, raised its forecast for inflation this year. This time around, the 2021 IPCA estimate, which was 8.51% last week, rose to 8.59%.

The data is contained in the Focus report, which compiles forecasts of economists and financial market analysts and is released weekly by the Central Bank (BC).

For 2022, the market now expects the IPCA to be 4.17%, compared to the 4.14% recorded last week.

Due to greater inflationary pressure, economists have also revised expectations for the key interest rate, Selic. According to Focus, Selic’s forecast for the end of 2021 was kept at 8.25% annually this week, but there was a revision to the rate forecast for 2022: it went from 8.50% to 8.75% annually.

Regarding the performance of the Brazilian economy, economists consulted by the monetary authority maintained their forecast for expansion of 5.04% of GDP for this year and revised those forecasts for 2022, from 1.57% growth to 1.54%.

Finally, in the exchange rate, bets indicate that the dollar traded at 5.25 Brazilian reais in December of this year, compared to last week’s forecast of 5.20 Brazilian reais; And R$ 5.25 at the end of 2022, with no changes compared to the previous bulletin.

international market

Investors remain vigilant about the consequences of the energy crisis in Europe, caused by supply shortages and rising natural gas prices. Commodity prices rose again on Monday, including iron ore and oil.

A barrel of Brent crude for December 2021 closed 1.53% higher at $83.65 a barrel. West Texas Intermediate crude for November 2021 closed at $80.52 a barrel, up 1.47%.

In the United States, analysts began to reconsider their expectations for the upcoming actions of the Federal Reserve (Federal Reserve, the US central bank) in light of the data on economic activity in the country. The US Department of Employment reported on Friday (8) that 194 thousand jobs were added in September in the country, compared to a forecast of 500,000 analysts interviewed before. Dow Jones.

At this pace, the labor market is expected to recover to pre-pandemic levels only in July 2022. The unemployment rate has fallen to 4.8%. Thus, for Goldman Sachs Chief Economist Jan Hatzius, although the gradual reduction of asset purchases by the Federal Reserve is expected to be announced at the next monetary authority meeting, this process will take months and interest rates will not rise until 2023.

In Asia, developer China Evergrande Group, going through a crisis, faced paying more interest on debt. Last month, the company actually failed to pay interest on two debts.

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